Private sector ends 2025 with high hopes for further expansion in 2026
According to the latest survey, firms remained optimistic about output growth over the coming year, prompting increased input purchasing and stock-building activity
KAMPALA, January 8, 2026 — Ugandan companies experienced broadly unchanged employment levels and rising input costs in December 2025, following a ten-month period of job creation. Despite these pressures, business conditions continued to improve, with the monthly Stanbic Purchasing Managers’ Index [PMI] edging up to 54.0 in December from 53.8 in November 2025.
PMI readings above 50.0 indicate an improvement in business conditions compared with the previous month, while readings below 50.0 signal a deterioration.
As seen throughout much of 2025, business conditions strengthened on the back of sustained growth in output and new orders. Input price inflation remained elevated as purchase costs rose further, while favourable demand conditions allowed firms to increase selling prices. The December survey therefore marked the eleventh consecutive month of improving business conditions.
According to the latest survey, firms remained optimistic about output growth over the coming year, prompting increased input purchasing and stock-building activity. However, employment levels were reported to be broadly unchanged during the month.
Commenting on the results, Christopher Legilisho, Economist at Stanbic Bank, said: “Conditions in Uganda’s private sector remained upbeat as the Stanbic Purchasing Managers’ Index stayed firmly in expansion territory in December. Strong consumer demand drove new orders and boosted output across the private sector. Employment conditions were healthy, with staffing levels broadly stable following ten months of growth, while backlogs increased due to capacity pressures arising from rising orders. This was reflected in further expansions in quantities purchased and inventories held by Ugandan firms.”
The Stanbic PMI is compiled by S&P Global based on responses from around 400 purchasing managers. The survey covers agriculture, mining, manufacturing, construction, wholesale, retail and services.
The index is a weighted average of five components: New Orders [30 percent], Output [25 percent], Employment [20 percent], Suppliers’ Delivery Times [15 percent] and Stocks of Purchases [10 percent].
Legilisho added: “The increase in input prices in December was largely linked to higher water and electricity costs. Purchase prices also rose amid concerns over construction costs, among other factors. Wage costs were broadly stable, while output prices increased due to robust customer demand. Overall, the data point to a briskly performing economy, which should be corroborated by forthcoming official growth figures.”
The latest expansion was primarily driven by stronger new orders, with sales increasing continuously since February 2025. Anecdotal evidence suggested improved demand conditions supported by rising customer numbers.
Where employment increased, respondents cited greater use of temporary workers. The combination of higher new orders and relatively stable staffing levels resulted in a renewed rise in backlogs during December.
Inflationary pressures also intensified towards the end of the year, as both input prices and output charges rose again. Higher total operating expenses were mainly attributed to increased purchase costs, while wage bills edged lower. Utility charges, construction materials and sugar prices were cited as key drivers of cost increases.
Firms sought to pass on higher input costs to customers through increased selling prices, supported by strong demand conditions typical of the festive season.
Input purchasing rose further in December as businesses responded to higher order inflows. Strong demand placed pressure on suppliers, leading to longer delivery times, although firms were still able to build up stocks.
Looking ahead, private-sector output expectations for 2026 remain positive. Companies anticipate stronger demand supported by increased investment in advertising and customer outreach, underpinning broad-based optimism across the sector.
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