Companies in the service sector report weak sales

The Business Activity Index (Freedom Holding Corp. PMI®, produced by S&P Global) reached 50.2 in February, down from 51.3 in the previous month, indicating that growth in activity was only fractional.

The index ranges between 0 and 100, with a reading above 50 indicating growth and below 50 signaling a decline.

Respondents noted that while improving demand, new project wins, and the introduction of new services boosted sales, these gains were partially offset by rising competition within the market.

Despite concerns over increasing competition, businesses continued to raise service charges in February. In fact, the rate of output charge inflation accelerated for the third consecutive month, reaching its fastest pace since early last year.

The rise in charges was primarily driven by increasing cost burdens, which grew rapidly and at the strongest rate in 11 months. The main contributors to the higher price uptick were general cost increases and rising salaries.

Although growth in output and new orders slowed midway through the first quarter of the year, Kazakhstani service providers remained highly confident about business activity over the next 12 months. The level of optimism rose for the fifth consecutive month, reaching its strongest level in nearly a year. Sentiment also remained above the six-year series average.

As a result, while job creation slowed in February, in line with weaker new orders, continued growth in new business and expectations of increased activity prompted service firms to expand staffing levels for the sixth consecutive month. However, the pace of job creation eased compared to the recent peak seen in January.

The Freedom Holding Corp. Kazakhstan Services PMI® is compiled by S&P Global based on responses from a panel of approximately 250 service sector companies.