The Freedom Holding Corp. Kazakhstan Manufacturing PMI® (Purchasing Managers’ Index™) posted 49.0 in November, remaining below the 50.0 no-change mark for the sixth month running and therefore signaling a deterioration in the health of the manufacturing sector. That said, the latest reading was up from 48.3 in October and pointed to only a slight worsening of business conditions.
Last month, production, new orders and purchasing activity all fell at slower rates than in October, but the pace of reduction in employment intensified amid reports of difficulties sourcing qualified staff. The easing of the downturn in the sector reflected softer reductions in both output and new orders in November, with production decreasing to the least extent since July.
That said, falls continued to be recorded, as customers’ reluctance to commit to spending led to reduced demand and a subsequent drop in production. Employment was also down, but here the pace of decline quickened from October and was the sharpest in three months. Alongside employee resignations, companies reported difficulties finding candidates with the appropriate skill sets.
Meanwhile, backlogs of work continued to rise, increasing for the third month running in November and to the largest extent since April 2022. Stocks of finished goods were also up, in part linked to a lack of sales. Here, the pace of increase was the most marked since July.
The upcoming VAT increase, along with wider uncertainty, led to a notable drop in sentiment regarding the 12-month outlook for manufacturing production. In fact, sentiment dropped to a five-year low in November. Those respondents who were optimistic about the future, however, generally linked this to hopes that signing new contracts would lead to greater production.
According to Erlan Abdikarimov, Director of the Financial Analysis Department at Freedom Finance Global PLC, the manufacturing sector in Kazakhstan showed a slight slowdown in decline in November compared to October, but the PMI remains below 50 points.
«On one hand, despite ongoing pressure from currency and inflation factors, their impact on business has somewhat eased over the month. On the other hand, companies report an intensifying labor imbalance and growing tension related to the upcoming VAT increase, which has affected production and investment plans. Against this backdrop, forecasts for the next 12 months have fallen to a multi-year low, but hopes for new contracts and demand recovery sustain moderate optimism in the sector,» he said.
