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Uganda’s private sector remains stable

Kampala, Uganda | JULIUS BUSINGE | Uganda’s private sector remains stable amidst a slight reduction in the activity, according to the latest monthly survey conducted by Stanbic Bank.

Stanbic Bank Uganda Purchasing Managers Index for manufacturing and services declined slightly from 54.9% in November to 54.3% in December 2017. However, the headline figure remained above the series average as output, new orders, employment and purchases of stocks all contributed to the above 50.0% figure.

PMI is 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%).

Readings above 50.0% signal an improvement in business conditions of the previous month, while readings below 50.0% show deterioration.

Jibran Qureishi, Stanbic Bank’s regional economist for East Africa said, while there have been signs of a pick-up in private sector lending by commercial banks, the high non-performing loan (NPL) ratios within the banking sector will probably keep the recovery moderate.

“An increase in public investment expenditure keeps up optimism that GDP growth will remain on upward trajectory over the coming year.” Qureishi added.

He said that public investment expenditure, projected at 21.1% of Gross Domestic Product in FY2017/18 has been singled out as key to supporting the transformation of the economy.

Okwenje Benoni, Stanbic Bank’s fixed income manager said each of the five monitored subsectors – agriculture, services, wholesale & retail, construction and industry – registered stronger business conditions.

He said the total new business was boosted by export orders for the second successive month amidst an easing in political tensions in key trading partners.

“This drove companies to expand their output for the eleventh month running. Higher client demand underpinned the expansions in both output and new business,” he said.

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