Business activity slightly falls in May

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Business activity slightly falls in May
Business activity slightly falls in May

Africa-PressUganda. Business activity slightly declined in May, probably reacting to buildup anxiety brought about by a surge in Covid-19 cases. However, it remained way above average, with a notable increase in new orders, output and employment.

The Stanbic Bank Purchasing Managers’ Index, which measures monthly business activity, indicates that the index slightly declined by 1.3 points to 56.5 in May, down from April’s reading of 57.8 points.

However, the index continued to be above the 50 point mark, indicating a consistent recovery since January. The Index indicates that during the period, firms remained confident of an expansion in the coming months with at least 88 per cent of business managers showing optimism in the 12-month outlook.

The survey indicates that confidence was generally centred on expectations of a further increase in new orders.

Interviewed business managers reported increase in sales amid higher client numbers, advertising and good customer care. New orders also expanded, with growth recorded across all five monitored sectors.

The survey also indicates that companies were able to keep on top of workloads, depleting backlogs that had accumulated in the months leading to December last year.

During May, firms responded to an improvement in client demand by expanding their purchasing activity and stocks of inputs and a reduction in supplier lead times for the second month in a row. However, during the period, input costs increased, with items such as cement, fuel, maize and metals returning an increase in price.

Higher electricity and water charges were also recorded, alongside rising staff costs, which forced some companies to rise product prices.

The report further states that new business increased across the agriculture, construction, industry, services and wholesale and retail categories midway through the second quarter.

Employment in the industry sector, however, registered a drop, which was the only monitored segment to register a drop over the month. Al though the report noted stability in Covid-19 cases, there has been a notable surge since mid-May with a numbers worsening at the beginning on June.

Optimism

According to Mr Ronald Muyanja, the Stanbic Bank head of trading, a range of factors supported the latest rise in business activity, which was the 11th in as many months.

Respondents, he said, reported increase in sales amid higher client numbers, advertising work and good customer care while new orders also expanded, with growth recorded across all five monitored sectors.

Business managers also responded to an improvement in client demand by expanding their purchasing activity and stocks of inputs.

Meanwhile, supplier lead times shortened for the second month in a row as vendors speeded up deliveries to try and secure more work.

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