Business optimism declined in January 2022 compared to December 2021, according to an ongoing poll by Verdict, as renewed COVID-19 restrictions due to the Omicron variant slowed growth and supply chain bottlenecks continued to hamper businesses worldwide.

Verdict has been conducting the poll to study the trends in business optimism during COVID-19 as reflected by the views of companies on their future growth prospects amid the pandemic.

Analysis of the poll responses recorded in January 2022 shows that optimism regarding future growth prospects decreased by seven percentage points to 60% from 67% in December 2021.

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 increased by four percentage points to 12%, whereas those who were very pessimistic increased 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%.

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The analysis is based on 786 responses received from the readers of Verdict network sites between 01 January and 31 January 2022.

Supply chain disruptions and Omicron spread continues to dampen business optimism

Canada’s small business confidence over the short and long term dropped significantly throughout January 2022. 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, the 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.

The IESI (Istat Economic Sentiment Indicator) shrank from 112.7 in December to 105.4 in January, indicating a drop in business confidence climate in Italy. The confidence index slipped across various sectors including manufacturing, construction, market services, and retail trade.

In Europe, Belgium reported a decline in business confidence in January, according to the National Bank of Belgium. The business confidence index dropped to 2.7 in January 2022 compared to 3.6 in December 2021, the lowest since March 2021. The business climate weakened in the building industry, while it improved for the business services sector.

Eurozone business activity also slowed in January due to COVID-19 restrictions and rapid spread of the Omicron variant, according to the IHS Markit Eurozone PMI and GDP. Business optimism dropped to 52.4 in January from 53.3 in December, with service sector growth being the most impacted.

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 the Omicron variant 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 that India’s business optimism dropped from 55.5 in December 2021 to 54.0 in January 2022, 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 2021 to 56.2 in January 2022, 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.