A survey commissioned by Stanbic Bank has revealed that new export orders fell during the month of August.
Respondents mentioned political instability in key export markets namely Southern Sudan and Kenya where fresh elections have just been announced as some of the reasons for the drop.
However there remains optimism that the last quarter will return better results if political risk in key trading partners begins to subside.
“Moreover, the current stable macroeconomic environment is likely to bode well for the Ugandan private sector in FY2017/18 and continue to moderately get the economy back on firm growth trajectory path,” the survey report observes.
Nonetheless, the headline Stanbic Bank Uganda Purchase Managers index (PMI) for August signalled a further improvement in the health of the Ugandan private sector.
At 54.3 in August, up from 54.1 in July, the seasonally adjusted index was above the average recorded over 15 months of data collection so far.
Commenting on August’s survey findings, Jibran Qureishi, Regional Economist E.A at Stanbic Bank said, “the private sector continued to show encouraging signs of improvement in August with the PMI average recorded over the past two months of 54.2 being much higher than the 51.6 average in the first two quarters of 2017″.
The Stanbic PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers Delivery Times (15%) and Stocks of Purchases (10%).
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
Analysing the performance of the various sectors, Anne Juuko, Stanbic Bank Ugandas head of Global Markets revealed that “following stability in the preceding month, the wholesale and retail sectors returned to growth in August”.
“In addition, further improvements in business conditions across the remaining sectors (agriculture, construction, industry and services) were maintained from the previous survey period,” she said.
She noted that Uganda’s private sector registered increases in both output and new orders for the seventh consecutive month.
In response to greater output requirements, private sector firms raised their payroll numbers accordingly with all five monitored subsectors increased their staffing levels during August.