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Business activity improves in May – Stanbic Bank survey

Kampala, Uganda | THE INDEPENDENT | As the country slowly emerges from a two-months lockdown, there is now a sense among business leaders that things might be getting better according to a survey sponsored by Stanbic Bank.

The Purchase Managers Index (PMI) rose to 41.9 points in May from the reading of 21.6 in April, an indicator business activity resumed as more shops opened, private cars released. The PMI asks business owners how they fared in a particular month.

The measure above 50 indicates the business is better but since the May survey shows it’s below 50, it is telling of many difficulties businesses still face as they emerge from the coronavirus (COVID-19) pandemic.

Jibran Qureishi, the Stanbic bank regional economist said “demand still remains weak. However, business sentiment has been boosted, by the gradual easing of lockdown restrictions.”

He added that “disruptions to supply chains and regional cross border transport complications will still remain challenges for private sector firms over the coming months.”

Kenneth Kitungulu, Stanbic’s head of global markets said optimism was much shown in the 12-month outlook for activity following the negative sentiment in April. However, the report says staffing levels were scaled back in line with lower workloads and efforts to reduce costs.

The survey found that prices for most goods dropped as retailers saw few customers. There are however those products that experienced a rise in prices on being scarce because imports have been limited.

The survey says most companies are reluctant to buy additional materials and suggested that current inventory levels were sufficient for output requirements.

On Monday, Bank of Uganda further cut on the forecast for economic growth putting it at 2%, down from 3-4 per cent projection in April. The central bank says the economy will go back to the usual growth levels at least in 2022.

On Thursday, Minister of Finance will read the budget for 2020/21 financial year. Businesses will be looking up for recovery support including heavy cuts in taxes to support their emergence from coronavirus crisis.

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