The ISM services index fell to 59.9 in January, hitting an 11-month low. With the Omicron wave putting pressure on growth in the developed world at the beginning of 2022, there are still some issues with the supply chain and price outlook. In the current environment, the lack of labor supply and the scarcity of supplies reduce the ability of the service sector to keep up with demand. However, the headline activity index is still in a strong growth position and the recessions remain far from the levels that pose a great problem for the economy in general.
If we look at the sub-items; The price index was 82.3 in January, down from the seasonally adjusted December figure of 83.9. Although it does not indicate a tangible decrease in its current state, it still shows a very high inflationary price pressure. The business activity index came in at 59.9, down from a seasonally adjusted reading of 68.3 in December, and the new orders index came in at 61.7, lower than the seasonally adjusted reading of 62.1 reported in December. The issue here seems to be the variant effect in general. The supplier deliveries index came in at 65.7, higher than the 63.9 reported in December. Despite the decline in most of the sub-indices in January, the growth rate for the services sector remains strong.
In employment trends, the decline from 54.7 to 52.3 means slower expansion. However, the employment component did not show a contraction in the ISM data for both the manufacturing sector and the service sector. In ADP, on the other hand, there was a loss of employment, most of which was due to the service and which we can directly attribute to the effect of Covid.
Supply chains used to be something that only supply chain managers talked about. It is now considered a general macro issue. The highly integrated supply chain system developed in the last three decades of globalization has created a current situation that has caused talk of inflation throughout the developed world. Of course, since it has come to this point from an extreme crisis condition, it was not a phenomenon that was calculated at the beginning of globalization. With the Omicron variant creating new uncertainties, COVID-19 is a key factor in the continued disruption. The spillover effect has also brought the event beyond the pandemic to significant capacity, logistics and workforce challenges.
For the week ended Jan. 29, the seasonally adjusted initial jobless claims figure was 238K, down 23K from the previous week's revised level. The previous week's level was revised up 1K from 260K to 261K. The 4-week moving average was 255K, up 7,750 from the previous week's revised average. The previous week's average was revised up by 250 from 247K to 247,250. The decrease in unemployment applications in the last week of January is positive in order to prevent the variant effect from being permanent.
Kaynak: Tera Yatırım
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