The monthly report for March issued by Stanbic Bank Uganda showed that the PMI in March increased to 53.2 from February's 51.2. The March reading is the highest since last November.
The threshold of 50 is a baseline to indicate an increase or decline of business conditions.
The report said the increase shows signs that the country's economy is gradually returning to the old normal.
Firms, it said, remained optimistic regarding the 12-month outlook, with companies expecting further improvements in new business in the coming months.
Last year, the PMI of the country fell below the 50 threshold for several months on account of an economically devastating COVID-19 pandemic.