Business confidence drops over coronavirus

Business confidence in Uganda has declined by more than half from the previous Stanbic Purchase Managers Index (PMI) following the current lock-down in the country, indicating how serious COVID-19 is causing havoc on Uganda’s economy.

The Stanbic Purchase Managers Index (PMI) survey report for April shows there was deterioration in business conditions following the lockdown that started on March 24 2020, with the headline PMI registering 21.6 in April, down from 45.3 in March – the lowest reading since the survey began in June 2016.

Deteriorating business conditions have now been signalled for two consecutive months. The survey highlights that company closures, a lack of new orders and restrictions on travel were highlighted as having the biggest impact on business.

The PMI survey report contains the latest analysis of data from the monthly survey of business conditions in the Ugandan private sector.

Stanbic Bank head of Global Markets Kenneth Kitungulu said company shutdowns amid the Covid-19 lockdown led to a further drop in output during April, with most respondents signalling a fall.

The survey states that all five broad sectors covered by the survey-recorded decreases in business activity and that falling demand by respondents and new orders decreased accordingly.

Companies looked to scale back employment and purchasing activity, in each case for the second month, running, adding that restrictions on travel meant those companies that ordered inputs during April faced lengthening delivery times. Several respondents also expressed concerns around the lasting impacts of Covid-19 on the economy.

Mr Kitungulu said the restricted movement during the past 45 days of the lockdown has led to a decrease in aggregate demand and output.

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