Kazakh manufacturing in March suffered the worst deterioration in performance since March 2022, according to the latest Freedom Holding and S&P Global Purchasing Managers’ Index (PMI) survey.

The PMI was posted at 47.4, down from 48.1 in February and below the 50.0 no-change mark for a third consecutive month.

The March reading pointed to a solid worsening in the health of the sector, said Freedom Holding.

It added that the key element that negatively impacted overall business conditions was a sharp and accelerated reduction in manufacturing output. Production decreased for the third consecutive month, and at a marked pace that was the fastest since January 2022.Source: Freedom Holding Corp, S&P Global

In some cases, firms reported that production was scaled back in line with lower new orders, but financial difficulties were also mentioned, said Freedom. It added that new orders decreased for the third month running in March, though the pace of decline on this indicator was only modest and softer than that seen in February.

Panellists reported muted customer demand, though some respondents noted signs of stabilisation at the end of the opening quarter.

The steep drop in output requirements led manufacturers to reduce employment at the sharpest rate since January 2022.

Saltanat Mukhambetaliyeva, economics research and analytics head at Freedom Holding Operations, said: "March's PMI data highlighted the extent to which manufacturers in Kazakhstan have pulled back on operations in response to a muted start to the year demand-wise. Particularly notable were steep reductions in output, employment and purchasing activity.

“That said, new orders themselves decreased only modestly and to a lesser extent than in February. This raises hopes that we are on the brink of an improvement in demand which will encourage firms to restart operations and build up capacity.

"It was encouraging to see the price indices from the survey continuing to show a softening of inflationary pressures following the marked increases at the start of the year. While firms are still feeling the effects of January's VAT rise, these impacts will hopefully continue to dissipate in the months ahead."

PMI data also showed that suppliers' delivery times lengthened for the second consecutive month amid poor weather conditions and disruption caused by the wars in Ukraine and the Middle East.