In July 2026, the Purchasing Managers’ Index (PMI) for Kazakhstan’s manufacturing sector by Freedom Holding Corp. fell to 47, marking the sharpest deterioration in business conditions since March 2022. The key factors behind the production downturn were a shortage of new orders, working capital problems and logistics disruptions.
In July, the PMI fell from June’s 48.5, confirming the sector’s negative trend recorded every month throughout 2026.
The decline in new orders was the sharpest since November 2023. Due to a lack of financing for new projects, manufacturers have been forced to cut production volumes for seven consecutive months. Because of insufficient workload, some manufacturers have temporarily halted operations or switched to a four-day workweek. The decline in employment was the second-largest since the beginning of 2022, surpassed only by March 2026.
At the same time, businesses reported logistics challenges. Raw material delivery times increased to their highest level since October 2024 due to delays at customs in Russia and mainland China. Cost-push inflation — rising prices for energy and raw materials — persists, though the pace of price growth for resources has slowed to its lowest level in four months. Manufacturers’ optimism fell to its lowest level since the pandemic in April 2020.
Saltanat Mukhambetaliyeva, head of economic research and analytics at Freedom Holding Operations LLP, noted that the downturn hit the food industry the hardest.
«July intensified the downturn in Kazakhstan’s manufacturing. The most notable monthly deterioration was observed in the food and drink industry, where new orders declined the most, despite continued growth in retail trade turnover according to official statistics. This suggests that the increase in turnover is being driven mainly by higher prices rather than by growth in physical sales volumes,» she said.
The expert links the decline in new orders to a shortage of working capital financing amid tight bank lending conditions. Business expectations for the year ahead fell to a six-year low, as existing orders are being fulfilled faster than new ones are coming in.
«Continued moderate easing of the National Bank’s monetary policy could provide some support for the sector. However, the impact of lower policy rates will not be immediate — monetary policy transmission typically occurs with a lag and depends on market conditions. As a result, businesses are likely to see a meaningful improvement in financing conditions only over the medium term,» Mukhambetaliyeva said.
As previously reported in July, Kazakhstan’s PMI had been steadily declining for six consecutive months.
