Uganda's June PMI rises as lockdown restrictions ease

Source: Xinhua | 2020-07-04

Uganda's Purchasing Managers' Index (PMI) rose in June compared to the previous month, showing business is recovering, although at slower pace, as COVID-19 lockdown restricts ease.

The PMI, released on Friday by Stanbic Bank, Uganda's largest bank, was at 46.5, up from 41.9 of May, but was still below 50.0, which signifies a positive outlook.

Readings above 50.0 signal an improvement in business conditions while those below 50.0 show deterioration.

The rise in PMI was attributed to the country's easing of COVID-19 lockdown restrictions at the end of May.

"Although some companies had been able to reopen during the month because of a loosening of the lockdown restrictions, others remained closed or had only just reopened at the time when the survey was conducted," Stanbic Bank Uganda's Head of Global Markets Kenneth Kitungulu said while releasing the index.

The construction and services sectors posted rises in both output and new orders, but falls were recorded elsewhere.

Fourteen percent of respondents, mainly from the agricultural sector, remain pessimistic about future business activity.

Companies, according to the survey, reported difficulties in paying staff in June due to limited administrative funds as a result of cash flow problems. This resulted in a combination of job cuts and a reduction in salaries across the board.

The report showed that overall input prices increased for the first time in three months as purchasing costs moved higher, due to rises in transportation costs as well as higher prices for utilities and inputs such as fertilizer and paper.

Despite a rise in overall input costs, firms continued to lower their selling prices amid a lack of demand and reduced spending power of customers, according to the report.