Business activity in Kazakhstan's services sector accelerated for a fourth straight month in July, according to the latest Freedom Holding Corp Kazakhstan Services PMI survey published by S&P Global. July recorded the strongest pace of expansion in more than 12 months, the survey noted.

The headline Business Activity Index rose to 54.1 in July from 53.5 in June, marking the second consecutive monthly increase. A reading above 50 indicates expansion, while a figure below 50 points to contraction.

The increase in activity was supported by a sharper rise in new business, which expanded at the fastest rate in three months as firms reported stronger client demand. Cost pressures also eased during the month, with input prices rising at the slowest pace in four months, providing some relief for service providers after a prolonged period of elevated inflation.Despite stronger business conditions, companies remained cautious about hiring. Employment continued to decline during July, while business confidence weakened compared with the previous month, reflecting ongoing uncertainty about the economic outlook.

The survey indicates that service providers entered the third quarter on a stronger footing, although softer optimism suggests firms remain cautious about future growth despite improving demand, according to the survey.

Saltanat Mukhambetaliyeva, economics research and analytics head at Freedom Holding Operations, commented: "Kazakhstan's service sector recorded a further expansion in headline business activity during July, logging its highest level of optimism in recent months and widening the growth divergence with manufacturing industries. As a result of this starkly contrasting performance, the spread between the business activity indices of service and manufacturing firms reached an all-time high. Nevertheless, the latest upturn in services looks somewhat fragile.

"Despite a solid inflow of new orders (excluding the transport and storage segment), payroll numbers across the sector continued to fall. Other underlying triggers include sustained, historically high pressure on margins — albeit easing from a three-month peak—alongside a sharp deterioration in 12-month business confidence, which marked the steepest monthly correction seen in the past ten months. The performance of the sector moving forward will heavily depend on how market conditions unfold over the coming months."