Kazakhstan's service sector continues to grow, employment remains under pressure

Kazakhstan's services sector continued its growth in May. The development was driven by rising new orders and an improved business climate. At the same time, employment fell for the fourth month in a row, according to the latest Services PMI survey conducted by S&P Global on behalf of Freedom Holding Corp. The overall business activity index stood at 52.7 points in May, down from 53.9 points in April. The reading thus remained above the 50-point threshold that separates growth from contraction. The data shows that business activity increased for the second month in a row, even if the pace of expansion slowed somewhat compared to the previous month. According to the survey, companies surveyed reported a continued rise in new orders, which supported growth in business activity across the service sector. At the same time, expectations for the coming twelve months improved, indicating confidence in the further development of demand and the general economic situation. Inflationary pressure eased somewhat in May. Although the cost of inputs continued to rise, price growth slowed compared to previous months. Service companies also increased their sales prices more moderately than at any time in the last 18 months. This indicates a gradual easing of price pressure in the sector. Despite the positive trend in orders and business activity, the labor market in the services sector remained tight. Companies reduced their workforces for the fourth month in a row. Job cuts reached their highest level in two and a half years. Overall, the survey suggests that domestic demand remains robust. At the same time, easing inflation could provide additional support for business development in the coming months. Saltanat Mukhambetaliyeva, Head of Economic and Financial Analysis at Freedom Holding Operations, explained: "Kazakhstan's services sector continued to grow in May, however, there are increasing signs of a transition from an expansionary to a more adjusted business strategy. Despite stable order intake, companies are being forced to cut labor costs due to shrinking margins and limited opportunities to adjust prices. This highlights the growing pressure on operational efficiency." At the same time, she pointed to existing risks for the development of demand: "Falling real incomes and a slowdown in consumer lending continue to weigh on domestic demand. In addition, the effects of rising energy prices are likely to become more noticeable in the coming months. Nevertheless, business expectations for the coming year remain cautiously optimistic, with SMEs currently showing the greatest resilience." The post Kazakhstan's service sector continues to grow, employment remains under pressure appeared first on ostwirtschaft.de.