Stanbic PMI: Demand Surges As Jobs Dip In December

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The final month of 2021 saw further increases in output and new orders in the Ugandan private sector as demand continued to improve, according to Stanbic’s Purchasing Managers’ Index (PMI).

However, the index shows, employment decreased following a rise in November and that price pressures were evident again. As a result, the headline PMI fell to 51.5 in December, down from 54.1 in November.

Although pointing to a fifth successive improvement in business conditions in the private sector, the latest PMI figure was below the average since the series began in June 2016.

Ronald Muyanja, the Head of Trading at Stanbic Bank Uganda said, “Rising customer numbers amid improving demand resulted in increases in both output and new orders during December, in each case for the fifth month running.”

According to the index, activity expanded in the agriculture, services and wholesale & retail sectors, but declined in construction and industry.

In turn, firms expanded their purchasing activity again, feeding through to another rise in stocks of inputs. Firms were aided in their efforts to build inventories by shorter delivery times from suppliers. But employment dropped in December after having risen for the first time in six months during November, some firms indicated that they had reduced staffing levels in order to limit costs.

Away from labour expenses, however, costs continued to rise, and respondents linked higher input prices to a range of factors, most notably increases in costs for cement, electricity, food, fuel and stationery.

A positive demand environment enabled companies to pass on higher input costs to customers, resulting in a fifth consecutive monthly increase in selling prices.

The prospect of further improvements in new orders supported confidence among 83% of the respondents, that business activity will expand over the course of 2022.

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The survey, sponsored by Stanbic Bank and produced by IHS Markit, has been conducted since June 2016 and covers the agriculture, industry, construction, wholesale, retail and service sectors. The PMI provides an early indication of operating conditions among the private in Uganda.

It 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 on the previous month, while readings below 50.0 show a deterioration

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