Omicron Drags US Output Growth to 18-Month Low

Source: IHS Markit

The United States welcomed 2022 with an 18-month low business output, dragged by weaker demand and issues brought about by the COVID-19 Omicron variant. XLI is up 0.40%.

• The IHS Markit Flash US Composite PMI Output Index stood at 50.8 in January, up from the 57.0 in December. This is the weakest performance since July 2020.
• Issues were recorded in both services and manufacturing due to the impact of the Omicron variant on the worsening supply disruptions and staffing concerns.
• Services also fell to an 18-month low of 50.9 from December’s 57.6, as employee absences were recorded due to the resurgence of the pandemic.
• The Manufacturing PMI slipped to a 15-month low of 55.0, while the manufacturing output plunged to a 19-month low of 50.3, mainly due to supply chain issues.
• New orders grew at the weakest pace since July 2020, along with the labor and supply shortages, which hindered growth.
• Chief Business Economist Chris Williamson believes the figures indicate that growth will pick up given that Omicron affected output more than demand.
• Optimism for the coming year is the highest in over a year, driving raw material price inflation down and providing encouragement for the near term.