Business activity in Kazakhstan’s service sector grew for a fifth consecutive month, but the rate of growth cooled in August, according to the latest Freedom Holding Corp Kazakhstan Services Purchasing Managers' Index (PMI) survey published by S&P Global. 

The Business Activity Index fell to 51.9 in August from the 13-month highe of 54.1 recorded in July. The latest reading pointed to the weakest increase in service sector output during the current five-month growth sequence, although it remained above the 50 threshold that separates expansion from contraction. The August index also remained above its long-run average of 49.4.

The PMI Business Activity Index is based on companies’ assessments of changes in business activity compared with the previous month. The seasonally adjusted index ranges from zero to 100, with readings above 50 indicating an increase and readings below 50 indicating a decline.

The moderation in business activity coincided with a weaker increase in new orders, suggesting softer demand across the sector during the month. Service sector companies also continued to reduce staffing levels, with employment declining further in August.

Despite weaker current activity, firms became more confident about the 12-month outlook for business activity compared with July. The improvement in sentiment points to stronger expectations for future activity among service sector companies.

Inflationary pressures also continued to ease during August, according to the survey. The data indicate that businesses faced less pressure from rising costs as the sector maintained its expansion.

Saltanat Mukhambetaliyeva, economics research and analytics head at Freedom Holding Operations, commented: "Kazakhstan’s service sector remained in growth territory as the second half of the year progressed. That said, the sector lost some momentum compared with the previous month, as slower inflows of new work translated into a more moderate rise in business activity. Underlying data showed that real estate companies continued to lead the way on growth.”

“Firms meanwhile remained reluctant to expand payrolls, suggesting that stronger growth and greater confidence in the year-ahead outlook may be needed to revive hiring activity. However, easing cost pressures, alongside only modest increases in service charges as some firms offered discounts and promotions, could help the sector sustain and build momentum," she concluded.