Uganda’s private sector finishes 2025 strong, firms optimistic about 2026
Looking ahead, output expectations for 2026 remain positive, with businesses expressing optimism driven by anticipated stronger demand. Investment in advertising and customer outreach was cited as a key factor underpinning confidence across the private sector.
Uganda’s private sector activity remained in expansion territory in December 2025, with the Stanbic Purchasing Managers’ Index (PMI) edging up to 54.0 from 53.8 in November, despite stagnation in employment levels and rising input costs.
A PMI reading above 50.0 indicates an improvement in business conditions compared to the previous month, while readings below 50.0 signal deterioration.
The latest data shows that business conditions continued to improve for the eleventh consecutive month, underpinned by sustained growth in output and new orders. However, firms faced persistent inflationary pressures as purchase costs rose further, prompting businesses to increase selling prices amid strong demand.
After ten months of job creation, employment levels broadly stabilized in December, according to the survey.
Commenting on the results, Christopher Legilisho, Economist at Stanbic Bank, said conditions in Uganda’s private sector remained upbeat.
“The Stanbic PMI staying in expansion territory in December implies that strong consumer demand drove new orders and boosted output in the private sector. Employment conditions remained healthy, with staffing levels broadly steady following a ten-month period of growth, while backlogs mounted due to capacity pressure from increasing orders,” Legilisho said.
“This was evident in further expansions in quantities purchased and inventories held by Ugandan firms.”
The PMI is compiled by S&P Global based on responses from about 400 purchasing managers across sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services. The index is weighted across five components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%).
The survey showed that rising input prices in December were largely driven by higher water and electricity costs, alongside increased construction material prices. While wage costs remained broadly flat, output prices rose as firms passed on higher costs to consumers amid robust demand.
“On the whole, this suggests that the economy is performing briskly, which should be confirmed when official growth data is released,” Legilisho added.
New orders continued to expand for the tenth straight month, with growth reported consistently since February 2025. Firms cited improved demand conditions, supported by an increase in client numbers.
Although some companies expanded their workforce, this was mainly through the hiring of temporary workers. With new orders rising faster than employment, backlogs of work increased again in December.
Inflationary pressures intensified toward the end of the year, as overall input prices and output charges climbed further. Higher operating costs were attributed to elevated prices for utilities, construction materials, and sugar, even as wage bills declined slightly.
Strong festive-season demand allowed firms to pass on higher costs to customers through increased selling prices.
Meanwhile, input buying rose again as businesses responded to higher new order inflows. Increased demand placed pressure on suppliers, leading to longer delivery times, though firms were still able to rebuild inventories.
Looking ahead, output expectations for 2026 remain positive, with businesses expressing optimism driven by anticipated stronger demand. Investment in advertising and customer outreach was cited as a key factor underpinning confidence across the private sector.
