Kazakhstan services PMI falls below 50 for first time in 10 months

Investing.com -- Kazakhstan’s service sector activity contracted in October for the first time in 10 months, according to the latest Freedom Holding Corp. PMI data released Wednesday.

The headline Freedom Holding Corp. PMI Business Activity Index fell to 49.3 in October from 50.8 in September, dropping below the neutral 50.0 mark that separates growth from contraction. This marks the first contraction in 2025 and the most pronounced reduction in service sector activity in a year.

The index has been declining each month since June, when activity was rising at a marked pace. The latest data showed some firms continued to benefit from improving demand, but others reported that cooling growth of new work, tax changes, competition, and repair works contributed to the fall in business activity.

New business received by Kazakhstan’s service sector increased for the 12th consecutive month, but the rate of expansion continued to soften and reached its weakest level since March. Businesses frequently cited declining purchasing power among customers.

Employment in the service sector fell for the second consecutive month in October. The pace of job shedding was slight overall but stronger than in September, with about 94% of survey participants maintaining stable employment levels.

Input costs rose sharply, with service providers citing greater supplier, utility, and food costs. Unfavorable exchange rate movements between the tenge and the US dollar were reported to have increased the cost of imported items.

Companies passed these higher costs on to customers, with the pace of output price inflation reaching its highest level since June and exceeding the long-run historical average.

Business confidence remained positive but historically subdued, only slightly stronger than September’s recent low. Companies expecting activity growth cited hopes for improved demand and plans for marketing and efficiency investments, while concerns about upcoming tax legislation changes dampened expectations.

The Kazakhstan Composite PMI Output Index, which includes both services and manufacturing, fell to 48.1 in October from 49.1 in September, indicating the most pronounced drop in private sector output in 20 months. Both sectors recorded decreases for the first time since February 2024.

"In October, Kazakhstan’s services sector entered a transitional phase following the strong performance demonstrated earlier this year," said Yerlan Abdikarimov, Director of Financial Analysis Department at Freedom Finance Global PLC. "Margin risks persist under pressure from rising procurement costs and currency fluctuations, compelling companies to adjust service prices."

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