Kazakhstan's manufacturing PMI fell to 47.0 in July 2026, marking the sharpest deterioration in business conditions since March 2022. The decline was driven by a shortage of new orders, working capital constraints, and logistics disruptions, reports infohub.kz.

The index dropped from 48.5 in June, confirming a negative trend throughout 2026. New orders contracted at the fastest pace since November 2023. Due to a lack of financing for new projects, producers have been forced to cut output for the seventh consecutive month. Some enterprises have temporarily suspended operations or shifted to a four-day workweek. The decline in employment was the second-largest since early 2022, surpassed only by March of this year.

Businesses also face logistics difficulties: delivery times for raw materials lengthened to the longest since October 2024 due to delays at customs in Russia and mainland China. Cost inflation, linked to higher energy and raw material prices, persists, but the rate of input price growth slowed to a four-month low. Producer optimism fell to its lowest level since the pandemic in April 2020.

Saltanat Mukhambetaliyeva, head of economic research and analytics at Freedom Holding Operations, notes that the downturn has particularly hit the food industry. "July intensified the decline in Kazakhstan's manufacturing sector. The most notable deterioration is in the food industry, where new orders fell the most, despite continued growth in retail trade according to statistics. This indicates that this growth is driven mainly by price increases, not by higher physical sales volumes," she explained.

The expert attributes the drop in orders to a shortage of working capital amid tight bank lending conditions. Business expectations for the coming year have fallen to a six-year low, as previously received orders are fulfilled faster than new ones arrive. "The industry could be supported by the continuation of the National Bank's cycle of moderate monetary policy easing. However, the effect of a lower base rate will not be immediate—typically, the transmission of such decisions occurs with a lag and depends on market conditions. Therefore, enterprises will only feel improved financing conditions in the medium term," Mukhambetaliyeva concluded.

Recall that in July, it was reported that Kazakhstan's business activity index had been steadily declining for six consecutive months.