In April, Kazakhstan’s manufacturing industry showed the first signs of stabilization. The latest data from the Freedom Holding Corp. Manufacturing PMI shows a slight improvement in market conditions. Despite the continued contraction in production, factories reported their first influx of new orders in four months.
The PMI remains negative
The Purchasing Managers’ Index (PMI) remained below the 50.0 no-change mark in April, posting 48.9, up from 47.4 in March. This indicates that business conditions have continued to deteriorate for four consecutive months. However, the latest decline was modest and the slowest since January.
Companies report demand returning
The main factor mitigating the downturn was the resumption of new contracts. This indicator increased slightly, breaking a three-month period of continuous decline. Survey respondents reported weak but positive signs of a recovery in consumer demand.
Despite new orders, companies continue to reduce output. The rate of decline is slower than in March but remains significant. Production capacity is not being fully utilized, forcing companies to optimize their workforce. Companies are laying off employees and reducing purchasing activity for the third consecutive month.
Geopolitics drives industrial inflation
The situation in the Middle East has put direct pressure on Kazakhstani factories. For the first time this year, analysts have recorded an acceleration in input cost inflation. The conflict has led to higher prices for fuel, oil, raw materials and logistics services. Manufacturers have been forced to pass these increased costs on to customers.
According to Saltanat Mukhambetalieva, head of economic research at Freedom Holding Operations, geopolitical instability is a serious obstacle to the recovery of domestic business margins. Meanwhile, the food sector and large enterprises are showing more stable growth, while small businesses, chemicals and metallurgy remain under severe pressure.
Last month, Kursiv reported that the increase in the value-added tax rate delivered a hard hit to factories in Kazakhstan. Companies were forced to reduce production volumes, place employees on unpaid leave and cut purchasing volumes.
