• Prior 53.1
  • Manufacturing PMI 59.0 vs 57.5 expected
  • Prior 58.0
  • Composite PMI 52.4 vs 52.6 expected
  • Prior 53.3

The services reading slumped to a nine-month low, owing much to a decline in activity as omicron spreads. That said, the sector still posted a slight growth reading and that argues that perhaps the impact of omicron on Q1 activity may be milder than anticipated. The slight easing of supply chain disruptions helped to bolster manufacturing activity, so that is a plus on the month too.

Markit notes that:

“The Omicron wave has led to yet another steep drop in spending on many consumer-facing services at the start of the year, with tourism, travel and recreation especially hard hit. However, so far the overall impact on the wider economy appears relatively muted, and most encouraging is the further easing of manufacturing supply chain delays despite the renewed virus wave. Not only has the alleviating supply crunch helped factories boost production, but cost pressures in manufacturing have also moderated.

“Importantly, while the Omicron wave has dented prospects in the service sector, the impact so far looks less severe than prior waves. Meanwhile, perceived prospects have improved among manufacturers, linked to fewer supply shortages, adding to the brightening outlook.

“In the meantime, however, prices for goods and services are rising at a joint-record rate as increasing wages and energy costs offset the easing in producers’ raw material prices, dashing hopes of any imminent cooling of inflationary pressures.”