Kazakhstan’s manufacturing sector showed early signs of stabilisation in April, although overall business conditions remained in contraction territory, according to the latest Freedom Holding and S&P Global Purchasing Managers’ Index (PMI) survey.

The headline Purchasing Managers’ Index rose to 48.9 in April from 47.4 in March, remaining below the 50.0 threshold that separates growth from contraction. The data signalled a fourth consecutive monthly deterioration in operating conditions, though the pace of decline was the slowest since January.

The improvement was supported by a renewed increase in new orders, indicating a modest recovery in demand, according to the statement accompanying the PMI data. However, production levels continued to decline, alongside further reductions in employment and purchasing activity, albeit at slower rates than in the previous month.

Inflation in both input costs and output prices accelerated in April, partly reflecting the impact of the war in the Middle East on global markets, the statement said.

Saltanat Mukhambetaliyeva, economics research and analytics head at Freedom Holding Operations, said: "In April, Kazakhstan's manufacturing sector showed the first signs of stabilisation following a quarter of subdued demand, though operating conditions remain challenging. After two months of easing, cost inflation has re-accelerated: the Middle East conflict, which had previously affected primarily supplier delivery times, is now feeding directly into fuel, raw material and logistics costs, intensifying the pass-through to output prices and constraining margin recovery."

"Asymmetry in business activity across sectors and company sizes persists: the food & drink segment and large enterprises are demonstrating more resilient dynamics, while chemicals, basic metals and small businesses remain under the greatest pressure. Business expectations over the 12-month horizon improved to a six-month high, while remaining below the long-run survey average," she added.