JLL Office Property clock Q4 2021

In the fourth quarter we saw the rise of two headwinds to the recovery: first was the emergence and rapid spread of the Omicron variant of COVID-19, which appears to be more contagious but less virulent than its predecessors. Mounting case numbers led to the reimposition or tightening of economic and movement restrictions. As countries began the rollout of third vaccine doses, the use of vaccination passports also become more widespread. The second headwind was the acceleration of inflation. This was driven by several factors including rising energy prices, continued supply chain bottles necks, and staff and skills shortages. The Omicron strain could exacerbate these pressures, pushing inflation further above the multi-decade highs we are currently seeing. Inflation is widely forecast to peak in early 2022 before falling gradually thereafter, though the risks are for a higher and later peak especially if the pandemic continues and inflation expectations and wages begin to creep higher. Business confidence remains buoyant, and where activity growth has softened, it largely remains positive. The manufacturing PMI indices have dipped but remain strong in the face of supply chain and cost pressures. Q4 also saw a much earlier than expected change in direction on monetary policy. As we ended the year, despite rising COVID-19 case numbers and tighter restrictions, the outlook for 2022 remained solid. Growth is forecast to continue at above-trend rates, supported by stimulative monetary and fiscal policy.