Factories face supply headaches with Omicron risk

Global factory activity accelerated in November but major supply bottlenecks were still a drag.

That's according to surveys released Wednesday (December 1).

The IHS Markit's final manufacturing Purchasing Managers Index for the euro zone rose slightly to 58.4 in November - up from 58.3 in October.

The number was well ahead of the 50 mark that splits growth from contraction.

But inflation was a concern.

Factories in the euro zone passed on rising costs of raw materials to customers at the fastest rate in the survey's history.

It suggested overall inflation in the bloc will continue to overshoot the European Central Bank's 2% target - which puts pressure on the bank to act.

Data on Tuesday showed inflation at a record high of 4.9%.

The update from the euro zone followed earlier reports from Asia.

In China, the closely watched Caixin/Markit Purchasing Managers' Index showed factory activity fell back into contraction in November.

Soft demand and higher prices hurt manufacturers.

The survey focuses on small firms in coastal regions and differed to China's official PMI numbers that showed manufacturing rose at a modest pace last month

Beyond China, factory activity seemed to be in recovery in a number of countries including Japan, South Korea and India.

But the November surveys likely did not reflect the recent spread of the new Omicron variant.

That has caused some countries to impose new border controls and may add more pressure to supply chains disrupted by the health crisis.

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