Kazakhstan manufacturing PMI ticks up in March on sharper expansion of new orders

Kazakhstan manufacturing PMI ticks up in March on sharper expansion of new orders
/ Tengri Partners, S&P Global
By bne IntelIiNews April 5, 2023

Renewed growth of manufacturing production in Kazakhstan amid a sharper expansion in new orders is shown by the March edition of the Tengri Partners Kazakhstan Manufacturing Purchasing Managers’ Index (PMI).

The headline PMI ticked up to 51.6 in March from 51.2 in February (anything above 50.0 denotes an improvement), signalling a modest improvement in the health of the manufacturing sector, and one that was the sharpest since last November, according to the PMI commentary issued by S&P Global.

Business conditions in Kazakhstan as assessed by the PMI series have now improved in five of the past six months. One of the main positives from the latest survey was a renewed rise in production, the first in four months, said S&P. Output rose solidly amid higher new orders and improving demand, it added, noting that the rate of growth was the sharpest in two-and-a-half years, and third-fastest since the survey began in March 2019.

Anuar Ushbayev, managing partner and chief investment officer at Tengri Partners, said: "The sustained expansions in new orders have now fed through to a solid increase in manufacturing production according to the latest Tengri Partners PMI data. This hopefully marks the beginning of a period of growth for firms who have struggled in the face of numerous headwinds in recent years.

"There were further signs of some of these headwinds easing in March. Input costs and output prices rose at the slowest rates for some time, while supply-chain disruption eased."

The rise in output was achieved despite employee resignations that caused a reduction in staffing levels during March, said S&P.

The commentary observed: “The ramping up of production meant that firms ate into their stocks of inputs at a rapid rate, while inventories of finished goods were accumulated to the greatest extent on record.”

It added: “Production growth also enabled manufacturers to bear down on backlogs of work, which decreased solidly following a slight increase in February. Less positive in March was the picture on employment, which decreased for the fourth month running and at the sharpest pace since January 2022.

“Respondents mainly attributed the drop in staffing levels to voluntary resignations.”

The commentary also noted: “Input costs rose again in March, with firms highlighting increased raw material costs. That said, the rate of inflation softened to the weakest since November 2019, in some cases thanks to an improved exchange rate position against the Russian rouble. In turn, output prices rose at the slowest pace in 32 months.

“Some signs of logistics improving meant that suppliers' delivery times lengthened to the joint-least extent in just over a year in March. Logistical difficulties were again the main factor leading to delivery delays, however.

“Finally, hopes that the improving trends in output and new orders seen in March will be sustained in the months to come supported confidence in the year-ahead outlook for production. Optimism ticked down slightly for the second month running but was still above the series average.”