By David Mwanje
Uganda’s private sector expanded in September, recording its slowest growth since January as businesses faced higher fuel and transport costs, delayed customer payments and pressure on supply chains.
The latest Stanbic Bank Uganda Purchasing Managers’ Index, compiled by S&P Global, fell to 53.0 in September from 55.0 in August.
A reading above 50 signals an improvement in business conditions compared with the previous month, while a reading below 50 indicates deterioration.
The September reading extended the period of improving private sector business conditions that began in February 2025.
Stanbic Bank economist Christopher Legilisho said new orders and output remained resilient during the month, supported by favourable demand conditions.
New orders increased across all sectors covered by the survey. Agriculture and wholesale and retail businesses recorded declines in output.
Businesses linked the increase in orders to customer demand, advertising and promotional activity.
Operating costs also increased during September. Companies reported higher spending on fuel, transport, logistics, utilities and wages, with input costs rising across all five sectors monitored.
Higher costs were passed on to customers, with businesses increasing selling prices in every sector except construction.
Supply chains also came under pressure. Supplier delivery times lengthened, with businesses reporting international transport delays and higher fuel costs.
Companies increased purchases and built up stocks to meet current orders and prepare for future demand. Inventories have now increased for 19 consecutive months.
Employment increased as businesses recruited temporary and permanent workers to handle new orders.
Backlogs of unfinished work rose for the fourth consecutive month. Some companies reported that delayed customer payments were affecting cash flow and their ability to process incoming orders.
The payment delays point to working capital pressure among some businesses at a time when operating costs are also rising.
The PMI covers about 400 private sector companies across agriculture, mining, manufacturing, construction, wholesale, retail and services. It tracks new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Businesses remained confident about activity over the coming year, citing expectations of continued customer demand, advertising and improvements in products.
The September PMI therefore shows continued private sector expansion alongside rising operating costs and pressure on cash flow and supply chains.
The Bank of Uganda’s Business Tendency Index also stood above the level associated with overall optimism in September, indicating that businesses continue to expect favourable conditions ahead.
