Kazakhstan’s services sector saw only a mild rise in activity in September, as growth slowed for the third consecutive month, according to the latest Purchasing Managers’ Index (PMI) data released by Freedom Holding and S&P Global.

The headline Business Activity Index measures month-on-month changes in the volume of business activity, with readings above 50 indicating expansion and below 50 signaling contraction. The index is seasonally adjusted. The index registered at 50.8 in September, down from 52 in August.

The Business Activity Index showed the weakest expansion since March, signalling a cooling trend after a period of strong performance earlier in the year, the accompanying statement published with the PMI data said. Although new orders continued to grow at a “solid pace”, the rate of increase was the slowest in six months. The moderation in demand was accompanied by a renewed decline in employment, suggesting that companies were cautious about hiring amid signs of slower momentum.

Business confidence for the year-ahead outlook dropped sharply, hitting a 28-month low and falling well below the long-run average, indicating rising uncertainty in the sector.

Yerlan Abdikarimov, director of Financial Analysis Department at Freedom Finance Global, commented: "In September, growth in business activity and new orders in Kazakhstan’s services sector remained positive, although the pace slowed noticeably compared with previous months. Overall, a slowdown was observed throughout the third quarter.

"The contributing factors include moderate demand, continued cost pressures, weakening of the national currency, and reduced employment. Intensified competition is restraining the growth of prices and service tariffs, compressing margins.

"The upcoming implementation of new tax rules at the beginning of next year is increasingly reflected in market sentiment. As a result, one-year expectations declined to their lowest level in more than two years, indicating companies’ cautious assessment of prospects."