Business optimism declined in January compared to December, as renewed Covid-19 restrictions due to the Omicron variant slowed growth and supply chain bottlenecks continued to hamper businesses worldwide.
Just Food sister site Verdict has been conducting a poll to study the trends in business optimism, as reflected by the views of companies on their future growth prospects amid the pandemic.
Analysis of the poll responses recorded in January shows optimism regarding future growth prospects decreased by seven percentage points to 60% from 67% in December.
The respondents who were optimistic increased by three percentage points to 25% in January, while those very optimistic decreased by ten percentage points to 35%.
The respondents who were pessimistic rose by four percentage points to 12%, whereas the proportion who described themselves as very pessimistic was up by two percentage points to 14% in January.
The percentage of respondents who were neutral (neither optimistic nor pessimistic) increased by one percentage point to 14%.
The analysis is based on 786 responses received between 1 January and 31 January 2022.
Supply chain disruptions and Omicron continues to dampen business optimism
Meanwhile, Canada’s small business confidence over the short and long term dropped significantly throughout January. Business performance expectations dropped by eight points to 36.9, according to the Canadian Federation of Independent Business (CFIB) Business Barometer Short-term Index. Meanwhile, a long-term optimism index dropped by eight points to 54.3.
All Canadian provinces reported a downward trend in business performance expectations over the short term, with Ontario witnessing a marked decrease in business optimism. Supply chain disruptions continued to hamper business performance with low unsold inventories and unfilled customer orders.
In Italy, the IESI (Istat Economic Sentiment Indicator) shrank from 112.7 in December to 105.4 in January, indicating a drop in business confidence. The confidence index slipped across various sectors including manufacturing, construction, market services, and retail trade.
Elsewhere in Europe, Belgium reported a decline in business confidence in January, according to the country’s national bank. The business confidence index dropped to 2.7 in January =compared to 3.6 in December, the lowest since March 2021. The business climate weakened in the building industry, while it improved for the business services sector.
More broadly, Eurozone business activity also slowed in January due to Covid-19 restrictions and the rapid spread of Omicron, according to the IHS Markit Eurozone PMI and GDP index. Business optimism dropped to 52.4 in January from 53.3 in December, with service sector growth being the most impacted.
In the UK, the Purchasing Managers Index (PMI) business survey revealed a slowdown in private sector business activity growth in Scotland in January to 52.7, its lowest in ten months. The wider survey indicated an overall slowdown in growth across the UK. Increased Covid-19 restrictions driven by the emergence of Omicron led to the slow growth in inflows of businesses and orders during the month, particularly in consumer services, while manufacturing picked pace due to the improved availability of materials.
In Asia, the IHS Markit India Manufacturing PMI revealed India’s business optimism dropped from 55.5 in December to 54 in January, a 19-month low. The country’s manufacturing sector activities moderated during the month due to Omicron-related restrictions that impeded its growth and performance.
The business confidence in the US dropped from 64.6 in December to 56.2 in January, according to Creighton University’s January Mid-America Business Conditions Index. About one-third of the supply chain managers are expecting supply chain blockages, a key driving factor of high inflation in the US, to worsen this year.