Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

U.S. manufacturing cools but globally factories take Omicron risks in their stride for now

EconomyJan 04, 2022 12:11PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A factory area is seen in front of Mount Fuji in Yokohama, Japan, January 16, 2017. REUTERS/Kim Kyung-Hoon

By Jonathan Cable and Leika Kihara

LONDON/TOKYO (Reuters) - Global manufacturing activity remained strong in December as factories took rising cases of the new Omicron coronavirus variant in their stride, although persistent supply constraints and rising costs clouded the outlook for some economies.

Rising global infections have inspired policymakers to tread carefully, with outbreaks in China forcing some firms to suspend production and threatening to disrupt output for memory chip giants, such as Samsung Electronics (OTC:SSNLF).

Yet for now, the hit from Omicron to output appears to be modest, according to surveys released on Monday and Tuesday with even a cooling in demand for goods in the United States still offset by robust numbers.

The Institute for Supply Management said on Tuesday that its index of U.S. factory activity fell to a reading of 58.7 last month from 61.1 in November, the lowest tally since last January. However, supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most most in a decade. Manufacturing accounts about 12% of the U.S. economy.

Elsewhere, manufacturing activity in the euro zone remained resilient at the end of 2021 as factories took advantage of some easing in supply chain bottlenecks and stocked up on raw materials at a record pace, a survey showed on Monday.

In Britain , manufacturing activity grew slightly faster than originally thought last month, another survey showed on Tuesday.

"Supply chain disruptions, however, likely will worsen this month, given that Brexit customs checks have been bolstered and Omicron likely will lead to renewed factory closures in Asia," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

In China , factory activity expanded at its fastest pace in six months in December, the Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) showed.

The findings from the private survey, which focuses more on small firms in coastal regions, tally with those in China's official PMI that pointed to an uptick in factory activity.

Other parts of Asia also fared well with manufacturing activity expanding in countries ranging from Vietnam to Malaysia and the Philippines.

"Manufacturing PMIs and timely trade data reveal that Asia's export-focussed industry gained momentum at the turn of the year," said Alex Holmes, emerging Asia economist at Capital Economics.

"While the Omicron variant presents a key threat to the outlook, it is unlikely to cause nearly as much disruption to industry as Delta did in Q3," he said.

In Japan, the world's third-biggest economy, manufacturing activity in December grew for an 11th straight month while bellwether exporter South Korea saw the fastest pace of expansion in three months, surveys showed.

"We expect Asia's exports and capex upswing to be sustained by continued global recovery, and Asia's manufacturing PMIs will remain moderately strong over the coming months," Morgan Stanley (NYSE:MS) analysts wrote in a research note.

Japan's PMI stood at 54.3 in December, remaining above the 50-mark threshold that indicates expansion in activity but lower than November's 54.5 as new order growth softened.

South Korea's PMI rose to 51.9 from 50.9 in November to mark the 15th consecutive month of expansion, as rising domestic demand offset sluggish overseas sales.

India's manufacturing activity continued to expand in December though at a slower pace than in November, as elevated price pressures remained a concern.

"The Omicron variant poses near-term growth risks by delaying the consumption recovery, but higher vaccination rates in Asia could help limit the damage to growth as compared to the Delta wave," Morgan Stanley analysts said.

(This story corrects paragraph 4 to say index for prices paid for inputs at U.S. factories dropped by largest in a decade.)

U.S. manufacturing cools but globally factories take Omicron risks in their stride for now

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email