Kazakhstan’s services sector continued to grow in May, supported by rising new business and improving confidence, although employment declined for a fourth consecutive month, according to the latest Freedom Holding Corp Kazakhstan Services PMI survey published by S&P Global. 

The headline Business Activity Index stood at 52.7 in May, down from 53.9 in April but remaining above the 50-point threshold that separates growth from contraction. The reading showed that business activity expanded for a second successive month, albeit May saw a slower pace than was seen in April.

Survey respondents reported a continued increase in new orders, helping to support output growth across the sector, the survey said. Companies also expressed greater optimism about future business conditions, reflecting expectations of sustained demand and economic activity.

Inflationary pressures moderated during the month. Input cost increases remained evident, but the pace of price growth slowed compared with previous months. Service providers also raised their selling prices at the weakest rate in 18 months, suggesting a gradual easing of pricing pressures within the sector.

Despite stronger business activity, employment trends remained negative. Service companies reduced staffing levels for the fourth month in a row, with the rate of job losses reaching its highest level in 30 months.

Although the rate of growth in Kazakhstan’s services sector slowed slightly in May, the survey suggests that domestic demand remained resilient and that easing inflation may provide support for business activity in the coming months.

Saltanat Mukhambetaliyeva, economics research and analytics head at Freedom Holding Operations, commented: "Kazakhstan's services sector continued to grow in May, though with signs of a shift from expansion towards an adaptive model. Despite a steady inflow of new orders, companies are forced to cut headcount further amid a serious squeeze in margins and limited pricing flexibility. This shows that firms are facing significant pressure on their operational efficiency.

"Declining real incomes and slowing consumer lending continue to narrow the domestic demand base, while the impact of rising utility tariffs has yet to be fully absorbed in the coming months. Against this backdrop, business expectations for the year ahead remain moderately optimistic, with the greatest resilience seen in mid-sized businesses."