Kazakhstan's manufacturing sector saw sustained improvements in April, according to the latest purchasing managers' index (PMI) survey data from Tengri Partners and S&P Global.
The data revealed that the sector is experiencing a boost amid strengthening demand, with output increasing for a second month in a row due to growth in new orders. Purchasing activity also increased. However, while price and supply pressures have eased, firms continue to report challenges with staff retention, leading to a further drop in employment.
Suppliers' delivery times were broadly stable, while the rate of input cost inflation softened to a near four-year low, partly due to an improvement in the tenge against the Russian ruble.
The headline Kazakhstan Manufacturing PMI is a composite single-figure measure of manufacturing performance, derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates an overall improvement in the sector. The headline PMI posted above the 50.0 no-change level for the third consecutive month in April, dipping only slightly to 51.3 from 51.6 in March. The index signalled a modest improvement in business conditions in the manufacturing sector.
New orders in Kazakh manufacturing continued to expand at the start of the second quarter, extending the currently ongoing sequence of growth to six months, Tengri Partners said. The latest rise generally reflected further demand improvements. In turn, firms expanded their production volumes for a second successive month, albeit to a lesser extent than in March. The increase in output helped firms raise their stocks of finished goods and deplete backlogs of work, despite a further dip in employment.
Purchasing activity continued to grow, Tengri Partners noted.
Firms were helped in their efforts to secure inputs by further signs of easing supply-chain disruption, it added. Lead times on the delivery of inputs lengthened only fractionally in April, and to the least extent in the last 41 months. Although there remained some logistical challenges related to the securing of items from Russia in particular, anecdotal evidence suggested that these issues were being overcome.
Cost pressures also eased, with the rate of input price inflation the slowest in almost four years and the second-weakest since the survey began in March 2019. While raw material prices rose, there were some reports that they were levelling off. An improvement in the strength of the tenge against the Russian rouble also helped to alleviate price pressures.
The rate of output price inflation, meanwhile, slowed to a 46-month low. Charges were up only marginally as some firms took advantage of softer cost pressures to offer discounts to customers in order to support demand. Business confidence remained broadly stable at an elevated level as current demand improvements fed optimism regarding the year-ahead outlook for production. Around 65% of panellists expressed an optimistic outlook at the start of the second quarter, according to the statement.
Anuar Ushbayev, managing partner and chief investment officer at Tengri Partners said: "The Kazakhstan manufacturing sector was able to build on the renewed output growth seen in March with a further expansion in April as the impressive run of new order expansion continued.
"Alongside stronger demand conditions, firms are also benefitting from improvements to the supply side of their operations. Input cost inflation was the slowest in almost four years in April, while suppliers' delivery times neared stabilisation as firms begin to overcome the logistical challenges that have caused such disruption over the past year," he added.