Economic growth in the United States slowed sharply in the first weeks of the year due to supply chain disruptions, high prices, and labor shortages linked to the surge in Covid-19 infections, according to data from a purchasing managers survey released Monday.
The U.S. IHS Markit flash composite purchasing managers index, one of the first comprehensive looks at economic growth this year, fell to 50.8 in January from 57.0 in December, severely undershooting expectations and signaling almost no growth in the economy.
"Soaring virus cases have brought the U.S. economy to a near standstill at the start of the year, with businesses disrupted by worsening supply-chain delays and staff shortages, with new restrictions to control the spread of Omicron adding to firms' headwinds," said Chris Williamson, chief business economist at IHS Markit.
"The slowdown in output growth was broad-based, with both manufacturing and service sector firms reporting near-stalled output as the steep spike in virus cases associated with the Omicron wave meant ongoing supply issues and labor shortages were exacerbated by renewed pandemic related containment measures," IHS Markit said in its report.
Service providers said that growth was slowed by labor shortages and employee absences linked to the omicron surge.
"Output has been affected by Omicron much more than demand, with robust growth of new business inflows hinting that growth will pick up again once restrictions are relaxed," Mr. Williamson said.
"This has in turn helped lift manufacturing optimism about the year ahead to the highest for over a year, and has also helped bring the rate of raw material price inflation down sharply. Thus, despite the survey signaling a disappointing start to the year, there are some encouraging signals for the near-term outlook," Williamson said.
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Tuesday, January 25, 2022
U.S. Economy Slows to 'Near Standstill' as Omicron, Supply Chain Delays, and Inflation Surge
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