Service sector activity cools further in Kazakhstan

The headline Freedom Holding Corp. PMI Business Activity Index fell for a third straight month to 50.8 in September, down from 52.0 in August. The headline figure pointed to only a mild rise in activity and one which was the weakest since March. Nonetheless, expansions have now been noted in each month since the turn of the year.

According to Erlan Abdikarimov, head of the Financial Analysis Department at Freedom Finance Global Plc., in September, growth in business activity and new orders in Kazakhstan’s service sector remained positive, although the pace slowed noticeably compared with previous months.

«Overall, a slowdown was observed throughout the third quarter. The contributing factors include moderate demand, continued cost pressures, a weakening national currency, and reduced employment. Intensified competition is restraining the growth of prices and service tariffs, compressing margins. The upcoming implementation of new tax rules at the beginning of next year is increasingly reflected in market sentiment. As a result, one-year expectations declined to their lowest level in more than two years, indicating companies’ cautious assessment of prospects,» he said.

The third quarter concluded with a third successive monthly slowdown in growth of services activity, with the most recent increase being the weakest since March. While the pace of expansion in new orders remained solid, there were also signs of a cooling trend. The rate of growth was the slowest in six months, following a period of robust expansion. A renewed decline in payroll numbers accompanied signs of a slowdown in the sector.

In August, growth in the service sector slowed as inflation increased.