U.S., European Factories See Easing Supply Strains, But Omicron Threatens Setbacks

Factories in Europe and the U.S. reported a further easing of supply-chain problems and associated cost increases as 2021 drew to a close, although the rapid spread of Omicron around the world threatens to worsen shortages of labor and supplies.

Factories around the world have faced shortages since the end of 2020. A surge in demand for goods such as laptops and bicycles took many by surprise at a time when shipping and other parts of the logistics network were in disarray.

Those shortages have held back growth and helped drive a pickup in consumer-price inflation. Central banks around the world are hoping that those problems will ease this year as demand for goods steadies and supply increases, helping to bring inflation rates down without a sharp rise in their key interest rates.

According to surveys of purchasing managers, there were some signs of a modest easing of bottlenecks in the final months of last year as Asian factories reopened following pandemic-related lockdowns.

But the rapid spread of the new Omicron variant of Covid-19 threatens fresh setbacks if governments impose new lockdowns, or quarantine requirements deprive manufacturers and logistics networks of needed workers.

Check out the full article from The Wall Street Journal here (subscription needed).