At the start of the third quarter, Kazakhstan's services sector PMI rose to 54.1 points, reaching its highest level in 13 months. Despite a significant influx of new orders, the industry is seeing a decline in business expectations and continued job cuts, according to infohub.kz.
According to a study by Freedom Holding Corp., the final PMI rose for the second consecutive month (from June's 53.5 points). The indicator has remained steadily above the neutral 50-point mark, indicating monthly expansion in the services sector since April this year.
The main driver of growth was the inflow of new orders, which increased at the fastest pace in three months. Businesses attribute the positive dynamics to an increase in tourist flows, the introduction of new business models, and an overall expansion of the client base.
Amid rising productivity, Kazakhstani service providers are reporting deteriorating expectations. The level of business optimism has dropped to its lowest point in six months. Only 16% of respondents forecast growth in activity over the next 12 months. Entrepreneurs' concerns are linked to macroeconomic instability, high competition, and changes in tax legislation.
At the same time, the sector has seen a continued decline in employment for the sixth consecutive month. Employers explain the layoffs by branch closures, company restructuring, and the transition of employees to a four-day working week.
In the reporting period, cost inflation (rising prices for raw materials and supplier services) was the weakest in four months. Nevertheless, increased operating costs are still being passed on to end consumers through higher tariffs.
Saltanat Mukhambetaliyeva, Head of Economic Research and Analytics at Freedom Holding Operations LLP, emphasizes the fragility of the current trend and the growing imbalance between sectors.
"In July, Kazakhstan's services sector showed another growth, recording the highest level of optimism in a long time, widening the gap with the manufacturing sector. As a result of strong divergent dynamics, the spread between business activity in services and manufacturing reached its highest level ever recorded. However, optimism in services looks somewhat fragile. Despite the inflow of new orders (except for the transport and warehousing segment), the industry continued to cut jobs. Among other triggers are the persistence of historically high pressure on margins, albeit easing after three months of peak, and a sharp decline in business expectations over a one-year horizon, with the strongest monthly correction in ten months," she said.
In July, it was reported that the services PMI had reached 53 points in the previous month. Current data fully confirm the continuation of the upward trend in the tertiary sector of the economy.
At the same time, analysts point out that the gap between the actively growing services sector and the stagnating manufacturing industry continues to widen, creating an imbalance in the country's economic growth structure.