The global economy expanded for an eighteenth straight month in December, according to the JPMorgan (NYSE:JPM) Global PMI™ (compiled by IHS Markit). The rate of expansion eased to a three-month low, however, as a surge in COVID-19 cases globally weighed on service sector performance.
Both manufacturing and service sectors expanded in December, although services business activity growth eased to a three-month low. A renewed rise in COVID-19 cases, fuelled by the spread of the more infectious Omicron variant, led to increased restrictions (both imposed and voluntary). This implicated the service sector performance in December, particularly for those dependent on face-to-face interactions. That said, services output growth continued to surpass that of manufacturing for a ninth successive month.
Meanwhile, manufacturers reported that constraints on production eased, which had been a positive sign. Supplier delivery delays eased while price pressures cooled in December, though supply issues remained a significant drag on production globally. The risk remains that the more infectious Omicron variant spread can further aggravate growth and supply chain issues, making it a key unknown to monitor going into 2022.
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