Business conditions in Kazakhstan’s manufacturing sector remained subdued in July. Softer demand and currency pressures weighed on output and employment, according to the monthly Kazakhstan Manufacturing Purchasing Managers' Index (PMI) survey, compiled by S&P Global and Freedom Holding and released on July 1.

The index edged up to 49.9 from 49.7 in June. Despite the slight increase, the index remained below the no-change 50.0 threshold for the second consecutive month, signalling a continued contraction in the sector.

Although new orders rose again during the month, the pace of growth slowed. Weaker demand conditions led to further declines in production and staffing levels. Manufacturers also reported an accumulation of inventories, with both inputs and finished goods left in stock.

At the same time, input cost inflation accelerated sharply, driven in part by depreciation of the national currency.

Yerlan Abdikarimov, director of the financial analysis department at Freedom Finance Global (100% subsidiary of Freedom Holding), said: "The July PMI data highlight persistent challenges in Kazakhstan's manufacturing sector. Despite softening demand, firms are showing adaptability by expanding their client base. The tenge depreciation has intensified input cost inflation, particularly in import-dependent segments, underscoring the ongoing need for supply chain diversification.

"Government support – mainly focused on higher value-added manufacturing – has yet to yield systemic impact but retains potential for longer-term growth. While one-year expectations have been moderately revised, overall business sentiment remains relatively resilient."