What's going on?

Data out on Monday showed European business activity climbed at its slowest pace in almost a year this month, as the region�s socialites sit tight till this whole Omicron thing blows over.

What does this mean?

European governments have been going out of their way to keep the recent wave of Covid cases under control, which could�ve spelled trouble for their manufacturing sectors in January. But the region�s latest business activity survey � which asks companies how busy they�ve been that month � showed factories weren�t affected all that much by new restrictions. Quite the opposite: manufacturing activity actually hit a five-month high on the back of easing supply shortages. Trouble is, restrictions are still a nightmare for hospitality and other consumer-facing sectors, with activity in services businesses dropping to a nine-month low. And that much bad was enough to outweigh any good: overall business activity fell to its lowest level since last February.

Why should I care?

Zooming in: Will the ECB be forced to act?
Business might be slowing down, but prices are only going up as companies pass their higher costs onto customers. In fact, the average price businesses were charging for goods and services in January rose at its fastest pace on record (tweet this). And since that might push record inflation even higher, some economists are starting to think the European Central Bank � which has previously said that it�won�t�raise interest rates this year � might be forced to do exactly that.

The bigger picture: Europe�s over Covid.
This manufacturing data is in keeping with other analysis over the weekend, which showed that Omicron�s causing a lot less damage to the economy than previous variants did � mostly thanks to high vaccination rates. Case in point: there were around twice as many visits to shops, bars, and restaurants this month as there were last January, even though this month�s infection rates make last year�s look like small potatoes.