The headline Stanbic Bank Purchasing Managers’ Index (PMI) has for the first time since February crossed into positive territory recording a reading of 50.3 in July. This follows easing of the lockdown that saw curfews revised and several businesses reopened.
The PMI recorded a reading of 50.3 during July, up from 46.5 in June representing a significant recovery from the 21.6 recorded in April after the lockdown was announced. However, the figure is still below the monthly average of 52.9 before the outbreak of the Covid-19 pandemic but above the 50.0 threshold.
Furthermore, spare capacity remained present in the private sector and as a result, firms were able to deplete backlogs of work again and continued to scale back staffing levels and purchasing activity.
Kenneth Kitungulu, the Stanbic Bank Uganda Head of Global Markets commenting on the headline PMI said, “The easing of Covid-19 lockdown measures and reopening of public transport contributed to an increase in new orders during July, the first since February. Output also returned to growth during the month, again helped by looser restrictions. The overall increase in activity was centered on the services and wholesale & retail sectors as shopping centres opened, with agriculture, construction and industry posting declines.”
Private sector returns to growth
Meanwhile, Ugandan private sector returned to growth as output and new orders both increased, but employment continued to fall.
Pearl Bank Celebrates Customers in Festive Campaign Dubbed Pearl SantaThe survey further shows an increase in selling prices for the first time in four months as companies passed on higher cost burdens to their customers which will further accelerate inflationary pressures going forward.
Jibran Qureishi, Head of Africa Research at Stanbic Bank said, “This is the first reading above the 50 mark since February and it doesn’t come as a surprise given that domestic containment measures have been eased while external demand has also modestly picked up. The outlook still remains uncertain amidst the Covid-19 pandemic.”
According to the report, lower demand for inputs helped suppliers to speed up delivery times during the month. The improvement in vendor performance was the first since February. Business sentiment remained positive, the survey predicts that the Covid-19 outbreak could subside and business conditions return to normal supporting confidence.
The 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%).
The monthly survey involving some 400 respondents is sponsored by Stanbic Bank and produced by IHS Markit. It has been conducted since June 2016 and covers agriculture, industry, construction, wholesale & retail and service sectors.
