The private sector entered August on a cautious but hopeful note.
Two major business surveys show that while the economy remains on a growth path, financial strain and weak present conditions are dampening sentiment.
The Bank of Uganda’s Business Tendency Indicators (BTI) pointed to declining confidence in current conditions.
But firms expressed soaring optimism for the coming months.
Meanwhile, the Stanbic Bank Purchasing Managers’ Index reported steady expansion.
It highlights resilience in output, hiring, and new orders despite inflationary pressures.
Confidence slips in the present, but expectations rise
Bank of Uganda’s BTI shows that overall business confidence stood at 57.2 in August, down from 58.2 in July and well below the May peak of 59.4.
Although still firmly above the neutral 50 mark, the figure underscored that optimism is losing some steam.
Present conditions were particularly weak. The “Present Business Situation” index dropped to 52.7, the lowest this year, signaling that firms are feeling squeezed.
Yet expectations for the future surged, with the “Business Situation in Three Months” rising to 63.8, its highest point in 2025.
Employment reflected the same divide: current hiring fell into contraction at 49.6, but expected hiring surged to 55.6, suggesting firms are preparing for stronger demand later in the year.
Sectoral performance was sharply uneven. Financial services surged with an index of 82.5, a clear sign of confidence, while construction collapsed to 46, dragged down by high costs and weak access to credit.
A show of resilient growth
The Stanbic PMI, on the other hand, showed the private sector holding firm.
At 53.3 in August, only slightly down from 53.6 in July, the PMI confirmed that business activity has expanded for seven straight months.
Firms reported higher output and new orders, driven by improved demand and successful marketing.
Hiring rose again across most sectors, with only manufacturing showing no change.
Energy Ministry Orders UEDCL Board to Investigate Top Management Over Performance GapsBusinesses also stepped up purchasing and inventories for the sixth consecutive month, indicating confidence in near-term demand.
But inflationary pressures remained evident. Rising wage bills, electricity, and raw material costs pushed up input prices, and companies responded by raising their selling prices.
Agriculture and construction offered some relief on costs, but most sectors continued to feel the pinch.
A mixed but hopeful picture
Taken together, the two surveys show an economy that is expanding but unevenly.
The BTI revealed fragile present conditions and significant financial strain, while the PMI highlighted ongoing resilience in day-to-day activity.
Employment figures highlight the contrast, with the BTI flagging contraction in current jobs even as the PMI confirmed steady hiring.
Both reports, however, agreed on one key point – the future looks brighter.
Firms are optimistic about demand in the final quarter, investing in marketing, restocking, and preparing to expand their workforces.
Regional context
Uganda’s PMI performance also placed it ahead of many regional peers. At 53.3, it outpaced Kenya, which remained in contraction at 46.8, and was stronger than South Africa (50.3) and Zambia (50.1).
It trailed only slightly behind Ghana and Nigeria, both at 54, which topped the continent’s rankings.
The business climate in August 2025 is defined by a balancing act. Steady growth and bright expectations for the months ahead set against the backdrop of tight credit, liquidity pressures, and rising costs.
Services and finance are thriving, but agriculture and construction continue to struggle.
The challenge for policymakers and firms will be to bridge the gap between short-term strain and the long-term optimism that continues to drive Uganda’s economic outlook.
