Business activity in Kazakhstan’s services sector continued to strengthen in June, according to the Freedom Holding Corp. Purchasing Managers’ Index (PMI). The services sector remained the most resilient part of Kazakhstan’s economy amid subdued conditions in manufacturing.
Stronger activity and rising demand
The final services PMI rose to 53.5 in June, up from 52.7 in May, remaining well above the neutral 50.0 threshold that separates expansion from contraction. The reading indicates that business activity in the sector has expanded steadily throughout the second quarter of the year.
A key driver of this growth was a strong increase in new orders, which has now been recorded for the fourth consecutive month. Survey respondents attributed the rise to favorable demand conditions, a growing customer base and the successful acquisition of new contracts.
Staffing and inflationary pressures
Despite higher workloads, service-sector companies continued to reduce headcount as part of ongoing cost-cutting efforts. Employment declined for the fifth consecutive month, although the pace of job losses slowed compared with the previous reporting period.
Companies have adopted this strategy in response to accelerating input cost inflation. At the same time, service providers raised their prices at a faster pace than in May to offset rising operating costs.
According to Saltanat Mukhambetaliyeva, head of economic research and analytics at Freedom Holding Operations LLC, the gap between the input cost and output price sub-indices has widened over the past three months, returning to levels last seen between 2020 and 2022 and significantly increasing pressure on profit margins.
«Against this backdrop, the continued moderate optimism among market participants appears to reflect expectations of a gradual recovery in effective demand and a slowdown in input cost inflation,» she said.
The S&P Global PMI is a widely followed macroeconomic indicator covering countries that account for approximately 85% of global GDP. June’s data highlight a growing divergence within Kazakhstan’s economy. According to the composite PMI, the country’s overall business activity index rose to 51.4, driven entirely by the strong performance of the services sector. Meanwhile, the manufacturing sector continued to contract, with production declining amid persistently weak demand.
