The sharpness of Omicron's economic bite now in focus

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news Omicron is now bending global economies, undermining expansions everywhere.</p><p>But first, we can report that dairy prices rose strongly again in <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>the overnight auction</strong></a>. They were up +4.1% in USD terms and up +6.4% in NZD terms. This time, the rise was led by the key WMP price. Volumes offered were marginally more than at the same auction a year ago. Overall prices however are up +28% over the same time frame, and that is leading the <a href="https://www.fao.org/worldfoodsituation/foodpricesindex/en/" target="_blank"><strong>FAO world dairy price index</strong></a> which is up +17% in the same period. (But having noted that, they are not quite yet back to their 2008 all-time highs. And the highest GDT level was at an auction in April 2013 and we are still -8% below that.)</p><p>In the US, there is a warning that the January jobs numbers will be 'ugly' as Omicron sweeps over the country. Illness absences count as job losses in their upcoming non-farm payrolls report, and that will have an outsized impact on the numbers due on Saturday NZT. Jobs growth under these conditions will be stunted, perhaps as low at +150,000 in the month.</p><p>The latest factory PMI readings indicate American factories got off to a slower start in 2022 with both the main indexes reporting a drop in their expansion levels. The widely-watched ISM PMI <a href="https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/january/" target="_blank"><strong>noted</strong></a> they are still in a "a demand-driven, supply chain-constrained environment" but that new order growth is slowing and backlogs are easing. The internationally-benchmarked <a href="https://www.mar