Uganda private-sector activity slows on uptick in input costs

Uganda’s private-sector economic growth decelerated in December from the previous month, hurt by a surge in company input costs, a survey showed on Thursday.

The Markit Stanbic Bank Uganda Purchasing Managers’ Index (PMI) declined to 54.3 from 54.9 in November. A reading above 50 indicates expansion; anything below, a contraction.

Markit said its data had showed “a further increase in overall input costs,” with slightly under a third of all surveyed firms reporting ballooning costs.

Input price inflation was recorded across all the monitored sectors: agriculture, construction, industry, services and wholesale and retail sectors.

“Cost burdens were driven up by higher purchase costs and wages/salaries,” the survey report said.

Growth was posted on several indicators, however, including new orders, which expanded amid an “easing in political tensions in key trading partners.”

A tense and protracted election season in neighbouring Kenya had curtailed business between the two countries and curbed private-sector activity during the period. Kenya is Uganda’s biggest regional trading partner and the landlocked country’s gateway to the sea.

Jibran Qureishi, East Africa economist at Stanbic Bank, said robust public spending on infrastructure would likely remain a key source of vitality for Uganda’s private sector in 2018 and keep GDP growth “on upward trajectory.”

Uganda hopes to begin crude oil production in 2020, and development of several related infrastructure projects is under way, including an export pipeline, roads and an airport.

Report courtesy Reuters