Kazakhstan’s manufacturing sector continued to face headwinds at the beginning of the fourth quarter. Business conditions deteriorated for a fifth consecutive month in October, according to the latest Purchasing Managers’ Index (PMI) data released by Freedom Holding and S&P Global.

Output declined further as new orders fell again, prompting manufacturers to reduce staffing levels and scale back purchasing activity. Despite the downturn, firms expressed greater optimism about future prospects, anticipating an eventual recovery over the coming year. However, many producers cited growing challenges in obtaining imported materials due to tighter customs checks along the Russian border, which disrupted supply chains and added to cost pressures.

The logistical difficulties, coupled with broader inflationary trends, drove another sharp increase in input costs. In response, many companies raised their selling prices to offset higher expenses.

The Freedom Holding’s Kazakhstan Manufacturing PMI index measured 48.3 in the negative zone in October compared to 49.2 in September, remaining below the neutral 50.0 threshold that separates growth from contraction. 

Yerlan Abdikarimov, director of the financial analysis department at Freedom Finance Global, said: "October showed a pronounced and noticeable contraction in business activity in Kazakhstan’s manufacturing sector.

"New orders fell for the second time in three months amid weak demand and maintenance work at some firms. Survey respondents also highlighted other issues, including a weakening tenge, rising delays due to tighter customs checks at the border, higher logistics costs and an accumulation of stocks of finished goods.

"Growth in firms’ selling prices remained resilient and registered a slight acceleration. Optimism among surveyed companies about future output improved markedly for the second month running."