September figures from the Freedom Holding Corp. PMI (Purchasing Managers’ Index) indicate a further slowdown in growth in Kazakhstan’s services sector. The modest rise in activity was accompanied by a weakening inflow of new orders and the slowest rate of services price inflation since December 2020.
Business activity trends
The headline PMI stood at 51.4 points in September, down from 51.9 points in August. The figure signals a slight increase in business activity. Analysts note that while growth has been recorded every month since April, the pace has slowed for the second consecutive month, reaching its lowest level over that period.
«According to anecdotal evidence, fewer new orders at some firms, temporary suspensions of companies’ activities and the loss of clients restricted the overall pace of expansion,» the study states.
At the same time, sustained growth in the sector led to a resumption of hiring. The staffing increase ended seven months of job cuts, although employment growth was marginal.
Prices and outlook
Input costs rose sharply in September. The report’s authors said cost pressures in the services sector stemmed from higher raw material prices and supplier price increases.
However, Kazakhstani companies were reluctant to pass these higher costs on to consumers. Services prices rose only marginally, with inflation falling to its lowest level in nearly six years.
According to Saltanat Mukhambetaliyeva, head of economic research and analytics at Freedom Holding Operations LLP, rising costs in the services sector, combined with weak purchasing power, have intensified pressure on business margins.
«The services sector continues to act as the primary stabilizer for Kazakhstan’s private sector; however, growth in business activity in September — much like the previous month — was insufficient to offset the downturn in the manufacturing industry. As a result, the composite PMI continued to fall and remained below the neutral 50.0 threshold for the second consecutive month,» the expert emphasized.
Despite the overall slowdown, business optimism regarding the outlook for the coming year persisted, rising to a three-month high.
Kazakhstan’s composite PMI indicated a further decline in business activity in September. The headline index fell from 49.3 to 48.9. The downturn was once again driven primarily by the manufacturing sector, although services also showed further signs of slowing growth.
Kazakhstan’s services sector growth had already slowed significantly in August. At the time, the composite private sector index fell below the critical 50.0 threshold due to a sharp decline in manufacturing output. By the end of the summer, input cost and output price inflation had fallen to their lowest levels in five and three months, respectively. Some service providers absorbed part of the higher costs and offered discounts to customers to stimulate sales.
