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Impact of Omnicron in EuroZone Index

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Impact of Omnicron in EuroZone Index

For the past several weeks, Omicron of Corona virus has been spreading in many countries of Europe and in view of its spread, governments of all countries are advising citizens to stay at home. Apart from this, rising inflation has prevented people from spending anyway. Due to the prevailing inflation, the increase in demand for services has almost ended with the consumers staying at home. The index of new business reached the lowest level since last April. This was seen despite the economic recovery in Germany. Factories benefited from reduced supply chain problems in Germany. But in France too, economic activity was affected by Covid-19 and inflation and business saw a more decline than expected. This is a sign that without the power of Germany, the Eurozone could have slipped further.

As per various market survey's has revealed that due to the influence of Omicron in January, the improvement coming in the euro zone weakened. Thous there can be some markers that indicates downfall in eurozone, without Germany's power. The Purchasing Managers' Index, which is considered a good indicator of the overall health of the economy, fell by about 1% compared to December. The index stood at 53.3 in December. Whereas in January it fell to 52.4, downhill 0.9. Lowest recorded since last February. Service sector witnessed all time low of past nine months.

Business activity in the UK fell to its lowest level in 11 months, but the price of things rose, due to which it is being speculated that the Bank of England will increase interest rates next week. Increased employment Factory activity in Japan grew at the fastest pace in four years, but activity in the private sector declined for the first time in four months. There too, the service industry suffered a setback due to the rise in the cases of coronavirus. Consumers were also hit by rising prices. Prices remained as high as November. Inflation set a new record last month. It is possible that this is increasing pressure on the European Central Bank to tighten policies further. However, the restrictions have had little effect on factories and most have remained open.

The Eurozone's output index reached its highest level in five months at 59.0. The demand is increasing and to meet it, factories have given jobs rapidly. The employment index rose from 55.3 to 57.5, the highest level since July.

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