Despite 2026 being an election year, the Ugandan private sector remains upbeat. The latest Uganda Stanbic Purchasing Managers’ Index (PMI), released on January 6, shows that companies are optimistic about growth, with business activity expected to expand throughout the year. The PMI remained in expansion territory in December, signaling continued improvements in the health of the private sector.
Business Confidence Remains High
The business outlook reflects the expectations of Ugandan business leaders regarding future growth, profitability, and economic stability. The confidence is largely driven by investments in advertising, new product releases, and efforts to expand outreach to new customers. Positive sentiment regarding output expectations was seen across all sectors covered by the PMI survey in December 2025.
The headline PMI stood at 54.0 in December, slightly up from 53.8 in November, indicating the eleventh consecutive month of growth in the private sector. According to Mr. Christopher Legilisho, an economist at Stanbic Bank, “Conditions in Uganda’s private sector were upbeat as the Uganda Stanbic PMI remained in expansion territory, implying that strong consumer demand conditions drove new orders and boosted output in the private sector.”
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Sustained Growth in Output and Orders
The survey highlighted that the private sector continued to improve with sustained expansions in output and new orders. Firms were also optimistic about the outlook for output in the coming year, driving greater input purchasing and efforts to build stocks. This optimism led to continued expansion in inventory levels, which have increased for ten consecutive months.
The rise in orders and expectations of future growth spurred companies to increase their inventories. This response is attributed to healthy demand conditions and anticipated upturns in output.
Employment and Staffing Trends
While the staffing levels remained broadly stable at the end of the year, the report indicated that firms had to deal with capacity pressures resulting from increasing orders. Employment growth ended a ten-month period of job creation, but temporary workers were hired to meet demand in certain sectors.
The report also noted a rise in backlogs as companies struggled to keep up with increasing orders. This is a sign of the growing demand and the strain on capacity in Uganda’s private sector.
Rising Input and Purchase Prices
Ugandan businesses faced higher input costs in December, primarily driven by increases in utility and fuel prices, particularly for electricity and water. Purchase prices also saw an increase, driven by rising fuel costs, along with higher charges for construction materials and sugar.
Despite these rising costs, firms were able to pass on some of the costs to customers, leading to higher output prices. This was evident across the manufacturing, wholesale and retail, and services sectors, where companies raised prices due to sustained demand.
Cost Pressures on Staff and Operations
A notable trend in December was the decrease in wage bills, particularly in the construction and wholesale & retail sectors. However, this was offset by increased staff costs in other sectors, leading to a mixed impact on overall employment expenses.
The overall increase in input costs and purchase prices reflects a growing concern over operating expenses. These cost pressures, combined with rising demand, are shaping the current business environment in Uganda as the private sector continues to expand.
Looking Ahead: Optimism for 2026
Looking ahead, the overall sentiment in Uganda’s private sector remains optimistic, with growth expected to continue into 2026. The PMI data points to sustained economic expansion, supported by strong consumer demand and ongoing investment in both the private and public sectors.
Though the upcoming election may bring some uncertainty, the business community appears confident that the economic fundamentals will continue to support growth. The steady rise in business activity and improved outlook for 2026 suggest that the private sector will remain a key driver of Uganda’s economy.
