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Businesses record above average performance for first time in 11 months
Business executives are optimistic that there will be an increase in new orders in the coming months. Photo / File
What you need to know:
- For the first time in about a year, businesses have recorded performance last seen before Covid-19 in 2019
Private sector business performance rose above average in September for the first time in 11 months, according to a survey by Stanbic Bank.
The survey, which examines performance of the economy through interviewing business chief executive officers and purchasing managers, indicates that the Purchasing Managers Index, rose to 52.9 up from 51.6 in August, which was slightly above the series average of 52.6.
This is the first time in 11 months that the index has risen above the average performance last witnessed before Covid-19.
During the period, details indicate, the private sector continued to register growth in new orders for the 14th month running, employment, output and purchasing activity.
Data from Uganda Bureau of Statistics indicate that the economy has been improving despite various shocks, with key economic indicators such as inflation, declining to 2.7 percent from 3.5 percent in August.
Mr Christopher Legilisho, an economist at Stanbic, said the September data pointed to a further rise in business activity with employment rising for the sixth consecutive month, which resulted from the need to meet increasing demand in new orders and the need to deplete outstanding business.
“Rising new orders encouraged companies to expand their own purchasing activity in the final month of the third quarter,” he said, but noted that input costs have continued to increase, rising in the last 11 months.
The Purchasing Managers Index is compiled by S&P Global from responses by purchasing managers in agriculture, mining, manufacturing, construction, wholesale, retail, and services.
During September, the index noted that new orders increased by 30 percent, while output rose by 25 percent. Employment rose by 20 percent, while suppliers’ delivery times and stock of purchase improved by 15 percent and 10 percent, respectively.
Mr Legilisho said improvements in customer numbers and new orders was due to marketing strategies, thus encouraging companies to expand their business activity, which saw output increase across all five broad sectors covered by the survey.
However, during the period, businesses reported an increase in staff costs and stock prices, which resulted from a rise in staff hires and input prices, especially for cement, food products and metal bars. Other input price increases were registered construction materials, fuel and utilities.
Suppliers’ delivery times lengthened amid reports of shortages of items, particularly food products, while new business from abroad decreased for the second successive month due to a fall in export orders for the past nine months.
The index also reported that businesses remain optimistic that output will further increase over the coming year, with more than 87 percent of surveyed purchasing managers projecting an expansion in business activity in the next 12 months.
