Manufacturing leads other sectors in employment creation

The Purchasing Managers Index by Stanbic Bank has indicated that manufacturing created more permanent and temporary jobs in October benefiting from the continued strengthening of the private sector. 

Overall, Stanbic noted that businesses recorded a rise in employment at the start of the fourth quarter with interviewed company leaders attributing the rise in head counts to an increase in business activities and demand.

Ms Mulalo Madula, a senior analyst at Stanbic Bank, said the survey indicated a sustained expansion in the private sector, which has stretched to seven months now.

However, she noted that the Purchasing Managers Index score had declined to 52.9 from September's 54.2, but was still above 50, which signals sustained improvement in business conditions, underpinned by increased output and new orders.”

The persistent increase in output, Ms Madula said reflected favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined.

However, the survey, which interviews purchasing managers or company executives, revealed rising input prices for both purchase and staff costs, but noted that “overall business sentiment remained positive, indicating that the private sector is likely to maintain its growth trajectory”. 

The survey further noted that there was a continued expansion in new business for the seventh month since April, supported by an increase in new orders, which as a result spurred a further rise in input buying, a trend that has now stretched into about two years.

Stanbic also indicated that there was an increase in purchasing activity amid expectations of stronger demand in the coming months, noting that with the exception of agriculture, each of the monitored sectors, registered an up-tick in business activity.

However, staff costs rose in October due to an expansion in employment numbers, in addition to payment for overtime and bonuses, especially in the manufacturing and wholesale and retail sectors.

Construction and agriculture, however, registered a decline in staff numbers.

The survey also noted that there was an increase in spending on advertisement and product quality, which in turn supported an upturn in new sales, thus the increase in new orders.

Vendor performance also improved, stretching into a year now, with business executives expressing confidence in the year ahead.

All five monitored sectors recorded optimism with plans to increase advertising spending, which is expected to result in new orders.

Construction materials register a drop in prices 

Meanwhile, several construction materials registered a price decline due to a slowdown in the construction and real estate sector, in addition to an improvement in macroeconomic factors, according to the Uganda Bureau of Statistics (Ubos).

Details by Ubos indicate that since September there has been a reduction in the prices of some construction materials such as softwood lumber, steel aluminum, and imported materials and equipment, thus lowering the cost of construction across the country.

Ms Irene N Musiitwa, the Ubos statistician, said the Construction Input Price Indices and Construction Sector Inflation for September registered a fall in the prices of cement, which dropped by 1.7 percent from 0.9 percent in August.

Others that experienced price reductions included nails, whose cost decreased by 1.2 percent from 0.7 percent, and sand, which reduced by 0.1 percent from a 0.6 percent increase. 

However, clay bricks and tiles saw prices increase by 0.1 percent, while sheet steel and roofing sheets rose by 4.1 percent compared to 0.6 percent in August.

The price of building inputs, especially cement, has remained volatile in the last five years due to production shortages resulting from factory breakdowns and a rise in demand due to increased real estate and construction activity.

But prices have been reducing due to stability in the economy, which has recently experienced a reduction in the cost of fuel, one of the biggest drivers of price changes. 

Ms Musiitwa also indicated that concrete bricks, blocks, and slab prices had also experienced an increase of 0.3 percent during the period. 

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