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U.S. Business Activity Slows in January with Omicron Surge

U.S. Business Activity Slows in January with Omicron Surge

Tuesday, 25 January 2022: U.S. business activity slows in January amid Omicron wave, says a IHS Markit survey.

Reports says U.S. business activity grew at its slowest pace in 18 months in January. The slowdown was because of a winter surge in COVID-19 infections worsening worker shortages at factories, However, demand remains strong.

The pace of activity in the US manufacturing activities slowed further for the sixth consecutive month in Jan-22. This came as the IHS Markit US Manufacturing PMI slipped to 55.0 (Dec-21: 57.7), missing the market consensus (56.7).

The lower-than-expected reading which is the lowest level in 15 months. It is attributable to the prolonged labour and supply constraints amid the resurgence in the domestic Covid-19 cases. New orders moderated steeply to the slowest level since Jul-20 while output remained unchanged during the month.

On the cost side, input cost inflation continued to ease, resulting in a downward trend in selling prices. Meanwhile, manufacturers were more optimistic as they hoped the supply bottlenecks to improve and for the new Omicron variant to have less impact on the economy.

“Looking ahead, we opine the US factory activities to benefit from the reducing pressure in the productions costs. In addition, the recent decision by the U.S. Supreme Court to suspend the vaccine mandate will improve the local worker shortages crisis.

“However, we remain concerned that the uptick in Covid-19 infections will further affect the ongoing supply disruptions,” says MIDF.


The IHS flash surveys provide the first clear indication of the economic damage done to the United States in the first month of the new year.

Any reading above 50 indicates that business is expanding, and numbers above 55 percent indicate that business is doing well. However, conditions aren’t as good as they were last fall, thanks to the latest coronavirus strain.

Important information: Prices rose at the slowest rate since last spring, indicating inflation. According to the IHS report, supply bottlenecks remain severe but are gradually improving.

New orders, a sign of future sales, remained strong as well. The employment situation was mixed.

Despite ongoing challenges, most executives were optimistic that the economy would improve later this year. They expect omicron to fade like other coronavirus waves and for supply lines to gradually clear.