Omicron Restrains U.S. Manufacturing; Supply Bottlenecks Slowly Easing

• A measure of U.S. manufacturing activity fell to a 14-month low in January amid an outbreak of COVID-19 cases, supporting the view that economic growth lost steam at the start of the year. 
• Institute for Supply Management’s (ISM) index of national factory activity dropped to a reading of 57.6 last month, the lowest since November 2020, from 58.8 in December. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists polled by Reuters had forecast the index would drop to 57.5. 
• Makers of chemical products reported massive interruptions to their production due to supplier COVID-19 problems limiting their manufacturing of key raw materials like steel cans and chemicals. Similar sentiments were echoed by their counterparts in the fabricated metal products industry. Transportation equipment manufacturers complained that transportation, labour and inflation issues continue to hamper their supply chain and ability to service their customers and machinery manufacturers said they were constrained by transportation restrictions and a lack of supplier manpower. 
• However, makers of nonmetallic mineral products are seeing light at the end of the tunnel, reporting that the supply chain crunch may be loosening a bit.

(Source: Reuters)