Kazakhstan services PMI shows March return to business activity growth

Kazakhstan services PMI shows March return to business activity growth
/ Tengri Partners, S&P Global
By bne IntelIiNews April 6, 2023

Service sector companies in Kazakhstan recorded a return to growth in March as business activity rose for the first time in five months, according to latest purchasing managers' index (PMI) data. 

The Tengri Partners Kazakhstan Services PMI Business Activity Index, which measures changes in the volume of business activity month on month, rose to 50.9 in March from 47.3 in February, marking the first month of expansion since October last year. The growth reported in new business over the first quarter was central to the renewed increase in business activity in Kazakhstan's service firms during March.

Inflows of new business have also increased looking at the past three months, with March seeing the fastest growth since August 2022. 

Price pressures have moderated, with service sector expenses increasing at the slowest pace in 27 months, while output price inflation was the weakest in over a year.

Anuar Ushbayev, managing partner and chief investment officer at Tengri Partners, said: "As the first quarter concluded, a return to growth in business activity resulting from a stronger increase in new business inflows better situates the Kazakh service sector for the year ahead. Moreover, price pressures continued to subside, with the slowest increases noted in input costs and output charges in 27 and 13 months, respectively.”

“Despite the positive performance in March, service providers remained cautious as employment figures fell for the fourth month running and the 12-month outlook was the weakest in 17 months and historically subdued," he added. 

However, services employment fell for the fourth successive month, reflecting both layoffs and resignations. The rate of job shedding was slightly softer than in the preceding survey period, with mentions of new hires amid greater business requirements helping to offset the downturn in employment.

Input costs rose for the thirty-second consecutive month in March, with general price hikes, higher costs from suppliers, and growth in salaries adding to company expenses. The rate of inflation, however, was the slowest since December 2020, resulting in output price inflation also easing.

While service providers in Kazakhstan remained optimistic regarding the prospects for growth in business activity in the coming 12 months, optimism fell sharply for the second month running, reaching the lowest level since October 2021. Companies expecting activity to rise linked confidence to hopes of further growth in customer numbers and improving market conditions.

The Kazakhstan Composite PMI, which measures private sector activity across both manufacturing and services sectors, posted 51.7 in March, up from 48.0 in February, indicating the return to growth. 

Anything above 50.0 on the PMI scale signifies an overall expansion in a sector and anything below 50.0 represents a deterioration.