Survey reports improved business growth optimism 

Businesses say they are hoping for an improved business environment boosted by growth in new orders. Photo / File 

What you need to know:

  • Improvements were recorded in industrial and service categories, which reported higher output, while agriculture, construction, wholesale and retail reported declines.  

Business executives and purchasing managers have said they are optimistic of an improved business environment boosted by growth in new orders, output and  an increase in employment. 

In details contained in the Stanbic Purchase Manager Index, more than 73 percent of interviewed business executives expressed a positive outlook with hopes of expanded new orders being the central driver.  

The index, which interviews business executives and purchasing managers to measure the status of the economy also noted that firms have predicted a moderation in price pressures due to a decrease in fuel prices, which have fallen to an average of Shs5,200.

Speaking during the releases of the Index in Kampala yesterday, Mr Mulalo Madula, the Standard Bank economist, said that whereas performance was still below previous measures, there were signs of improving business activity for the fourth month in a row. 

Specifically, he said, improvements were recorded in industrial and service categories, which reported higher output, while agriculture, construction, wholesale and retail reported declines.  

“The improvement in demand has been a recurring topic and reportedly a major driver of growth, employment, and purchasing activity. Businesses continue to evaluate the future business situation positively. This is due to expected growth of new order and a moderation of prices,” he said, noting that, however, the growing risk of a global recession could cloud the growth outlook. 

Yesterday, Stanbic indicated that the November Purchase Manager Index expanded slightly to a score of 50.9 from 50 in October.  

During November, the Index noted, business reported improvement in output, new orders and employment, signaling stability in the economy, despite various shocks.    

This is the third time in the past four months that Stanbic has reported an improvement in the business environment even as the Purchase Manager Index is still below the average score.

Stanbic conducts a monthly score of the business environment, in which a less than 50 score signals a decline in economic performance while a score of 50 and above indicates a stable or an improved business activity. 

During November, Stanbic noted that businesses had recorded an increase in output in the industry and services categories while declines were recorded in agriculture, construction, wholesale and retail.

The increase, the Index noted, encouraged companies to expand their staffing levels thus increasing employment for the second month running, which helped companies to keep on top of workloads. 

Purchasing activity

The Index also reported renewed increase in purchasing activity, ending a two-month period of decline but also recorded an increase in staff costs with wages and salaries rising for the third month running. 

However, suppliers’ delivery times, especially for poultry feeds, lengthened due to scarcity, while input costs rose due to an increase in the cost of electricity and water. 

New export orders rose due to return of new business from abroad returned, ending a six-month sequence of contraction.