May 2020 Federal Reserve Board's Beige Book

DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on May 27, 2020. It "... was prepared at the Federal Reserve Bank of Kansas City based on information collected on or before May 18, 2020. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

The excepts are chosen for their relevancy to the recruitment, staffing, employment services, and IT services sectors. The inclusion or exclusion of any sections or wording, the inclusion of each District's service areas (note that sections of some states are divided and end up in more than Fed District), as well as emphasizing certain sections with special typefaces (e.g. bold-faced and / or highlighted) is done solely at the discretion of steinbergemploymentresearch.com. The full report can be found at the Federal Reserve Board.

First District  --  Boston (CT, MA, ME, NH, RI & VT)  return to District list

Economic activity continued to decline into May according to First District business contacts. Many retailers and almost all hospitality businesses reported low to nil activity levels because of the pandemic. Responding manufacturers and staffing firms cited ongoing fall-offs in sales or revenue in recent weeks, but mostly still at sustainable levels. ... Many firms furloughed or laid off workers, but some, involved in "essential" or pandemic-fighting businesses, retained staff and even continued hiring. Near-term outlooks were highly uncertain and generally downbeat.

Employment and Wages

Employment was generally down among business contacts. At auto dealers, many sales workers were furloughed as transactions moved online. Many employees at year-round tourist operations were laid off. Eight of 10 manufacturers said they had frozen or largely frozen hiring; the two exceptions cited increased output. Some manufacturers laid off or furloughed workers and some implemented pay reductions but, for the most part, headcount and pay remained at pre-pandemic levels. Many firms reported providing hourly supplements for production workers because of work-related risks. While their overall bookings declined, staffing contacts reported that hiring employers were generally offering increased pay to candidates, as much as 25 percent to 30 percent higher than before the pandemic; they expect these higher pay rates to be temporary.

Manufacturing and Related Services

Experiences varied widely among 10 responding manufacturers. Four firms reported higher sales than a year earlier. For two semiconductor firms, demand for consumer electronics remained strong. For a diagnostic equipment maker, the mix of demand changed, with less from universities and more from hospitals and other institutions on the front line of the fight against COVID-19. A dairy firm saw "tremendous growth" in March as households stocked up. The explanations for firms with weaker sales ranged from demand reductions from the auto industry and commercial aviation to productivity declines related to COVID-19 prevention.

Nine of the ten contacts said that all their facilities were open and only a few reported that any plants were shut at any point since the pandemic started. These firms' processes were well-suited to social distancing, with well-defined schedules and activities that required no contact between workers. Six contacts, including one with rising sales, reported negative revisions to capital spending.

The outlook was pessimistic for almost all manufacturing contacts. A veterinary products maker said they expected demand to pick up this summer. By contrast, most respondents said they were very uncertain about when or even if demand would return to previous levels.

Staffing Services

Overall demand and placement activity at New England staffing firms slowed compared to pre-pandemic levels, but did not halt. Labor supply was mixed: one firm saw three or four times as many replies to a job posting as before COVID-19; others described supply as volatile. A majority of contacts noted that for some people, unemployment benefits could outweigh a salary, providing less incentive to find a job. Some employers were interviewing and onboarding direct-hires virtually in the past six weeks — a sign that companies were looking beyond the current situation.

Firms reported finding ways to cope with the challenges brought on by COVID-19, with new business strategies or new sales people in some cases. All contacts who were eligible for the Payroll Protection Program received funding, which they regarded as vital support; businesses were also lining up other credit lines and resources in the face of uncertainty. The majority of contacts reported no major structural or compensation changes within their organizations due to COVID-19. Overall, contacts expressed optimism, "excited" (as one put it) to facilitate hiring during the upcoming recovery.

Second District  --  New York (CT, NJ & NY)  return to District list

The Second District economy contracted substantially again in the latest reporting period, as widespread closures and stay-at-home orders severely constrained business activity. Employment continued to decline, and wages were mixed but down modestly, on balance. Businesses reported that input prices rose slightly but selling prices decreased slightly. Activity fell in every sector, with particularly widespread declines in leisure & hospitality. However, business contacts tended to be less pessimistic than in the prior report about the near-term outlook, and those in the manufacturing, construction, real estate, and health services sectors expected modest improvement. ...

Employment and Wages

The labor market has remained weak, as widespread layoffs have continued and hiring has been spotty. Two major employment agencies — one in New York City and another in upstate New York — noted that hiring was sluggish in April, though the latter noted a modest pickup in early May. A wide array of business contacts, as well as employment service firms, reported widespread layoffs and furloughs, especially at small to medium-sized businesses. However, the vast majority of these were viewed as temporary, with workers expected to be re-hired when business activity rebounds. Some businesses have already made efforts to recall laid off workers, as well as hire new workers. A number of these firms noted that this has been challenging, with many unemployed workers reluctant to return to work — some attributed this to generous unemployment benefits, as well as safety concerns.

Reports from across business sectors remained negative. Contacts in leisure & hospitality, transportation, retail, and construction reported the most widespread staff reductions, while businesses in manufacturing, information, finance, and professional & business services noted modestly declining staffing levels.

Looking ahead, contacts in both manufacturing and real estate said they expect a modest pickup in employment, while those in leisure & hospitality, retail, finance, and professional & business services projected steady staffing levels. Businesses across other sectors expected moderate staff cuts, on net, in the months ahead.

Wages have mostly been flat to lower since the last report. Businesses in the hard-hit leisure & hospitality sector continued to report widespread reductions in wages, whereas contacts in health services and finance indicated steady to modestly rising wages. Contacts in other service industries reported modest declines in wages.

Manufacturing and Distribution

Manufacturing, transportation, warehousing, and wholesale trade firms reported a further drop-off in business activity in recent weeks. However, there was substantial variation across segments, with those manufacturing and distributing essential goods faring much better than average. New York State and New Jersey are lifting restrictions on manufacturing before most other sectors.

Looking ahead, manufacturers expect activity to rebound, while wholesale and transportation firms foresee further weakening in activity. Businesses have continued to cut both actual and planned capital spending.

Services

Service industry contacts reported continued widespread deterioration in business activity. Leisure & hospitality contacts reported particularly widespread declines in activity, as restaurants remained shut down for dine-in service and hotels suffered from an almost complete drop-off in travel and tourism.

Contacts in professional & business services also indicated steep declines in activity, while businesses in the information, health, and education sectors all reported more moderate, but still fairly widespread, declines.

Looking ahead, business contacts continued to express great uncertainty about whether and when business would get back to reasonably normal levels, but there continued to be fairly widespread pessimism. ...

Third District  --  Philadelphia (DE, PA & NJ)  return to District list

Third District business activity continued to fall sharply during the current Beige Book period, as the COVID-19 pandemic persisted across most of the mid-Atlantic region. Statewide stay-at-home orders and mandated closures of nonessential businesses remained in place for most of the current period. Economic contraction continued at a moderate or steep rate for manufacturing, services, and most consumer sectors; tourism fell modestly further to a near-zero level. ... The wage path remains unclear, although downward pressure may emerge once hardship pay is no longer needed. Prices fell modestly, as lower demand and low oil prices prevailed. As mandated closures begin to lift, firms are hopeful that business will resume. However, contacts are uncertain how fearful consumers will be while the COVID-19 threat remains and how freely consumers will spend after the threat lifts.

Employment and Wages

Employment continued to contract sharply. By mid-April, over half of the firms reported that employment had declined. A greater percentage reported a shorter average workweek. By the end of the period, about eight percent of the firms in our weekly survey reported that they had shut down. In other responses, almost 40 percent ceased all hiring and 25 percent reported employee furloughs and reductions of employees' average work hours.

Staffing firms reported that activity was down in a range from 35 percent to 50 percent. One contact observed that over the course of a day, a recruiter might make 40 calls to prior job candidates, speak with four, and hire one. In our weekly survey, just 10 percent of the firms reported that they had recalled furloughed workers. When asked about impediments to recalling workers, 33 percent of the firms noted fear of infection and 25 percent noted lack of childcare; overcoming the lure of expanded unemployment benefits was noted by 29 percent of the firms.

The path of wages continued to be unclear, as firms offered mixed reports of various wage strategies. Some firms are still paying premiums to attract and retain frontline workers. Other firms were forced to cut wages, hours, and overtime in order to survive. In mid-April, over one-third of the nonmanufacturing firms reported decreases in wage and benefit costs.

Manufacturing

According to manufacturing contacts, the contraction became broader and steeper during the current period. At mid-April, about three-fourths of the firms reported decreases in shipments and in new orders.

By the end of the period, three-fourths of the firms in our weekly survey reported that sales or new orders were down by greater than 5 percent of expectations prior to the pandemic; one-third reported decreases in excess of 30 percent or had shut down.

According to several firms with global perspectives, supply chain problems have shifted from China to Mexico. One contact observed that Europe and the U.S. will not recover as easily from the pandemic as China did and that many facility investments in the U.S. have been delayed. A key supplier noted that U.S. manufacturing activity is down nearly 20 percent and "moving sideways now."

Nonfinancial Services

Even more so than manufacturers, a broader cross section of service sector firms reported declining new orders/sales in the current period than before – resulting in another severe overall decline. At mid-April, almost nine-tenths of the firms reported decreases of sales or revenues, and two-thirds of the firms reported decreases of new orders.

By the end of the period, over 70 percent of the firms in our weekly survey reported that sales or new orders were down by greater than 5 percent of prior expectations; nearly 40 percent reported decreases in excess of 30 percent or had shut down.

Fourth District  --  Cleveland (KY, OH, PA & WV)  return to District list

The Fourth District's economy deteriorated further in the current reporting period after it contracted sharply in the previous period. Firms across a broad range of sectors reporting declines in customer demand. The shuttering of physical stores and reduced travel because of the coronavirus pandemic kept sales weak for retailers and hospitality establishments. ... Manufacturing orders declined, and producers slashed capital investments, although a number of contacts believe their current backlogs will tide them over until demand improves. The slower pace of construction activity, reduced manufacturing production, and weak consumer spending resulted in low cargo volumes. Relatively strong areas of economic activity included grocery sales and business lending. ... However, few expect a strong recovery given the uncertainty of the coronavirus's path.

Employment and Wages

Employment declined in a broad range of sectors as layoffs were widespread and hiring was limited to a handful of firms. Half of contacts reported decreasing staff levels during the current period, compared with about 40 percent that did so in March. Furthermore, only one-third of contacts who reduced staff levels expect to rehire close to the full number of separated staff when their businesses reopen. This expectation suggests employment is unlikely to climb back to pre-pandemic levels quickly after businesses reopen. Firms that held their staff levels flat tended to be in financial services, construction, real estate, or manufacturing. In several cases, firms in these sectors cited the Paycheck Protection Program as enabling employee retention. The few firms that increased staff included grocers, who saw an increase in at-home food demand and curbside pickup, and a couple of large banks that needed back-office support. Some retailers started to recall staff in limited numbers as businesses were allowed to reopen. One staffing firm reported that his clients were starting to increase hours or bring back workers who were laid off.

Multiple contacts in a variety of industries noted additional labor market challenges, including limited access to child care services keeping workers away from job sites, workers' requesting to stay home out of fear of the virus, and unemployment benefits that disincentivized workers from rejoining payrolls.

Overall, wage pressures were flat. Although the majority of firms left wages unchanged, one in five contacts reduced workers' pay, a marked increase from the number of contacts who did so in the previous period. Wage cuts were concentrated in retail, real estate, professional services, and civic organizations. Multiple contacts reported wage reductions of at least 10 percent for office workers or nonfurloughed staff. In cases in which wages increased, these increases tended to be for employees at a variety of banks, transportation firms, and manufacturers. These firms raised wages for people who continued to work on site, in a number of cases by $1 to $3 per hour.

Manufacturing

Manufacturing orders continued to slide. Several contacts noted that the shutdown of automotive production was particularly painful; others reported that they anticipated long-lasting and adverse impacts to the aerospace and energy sectors. More than two-thirds of contacts indicated that capacity utilization is below its normal range, citing lack of demand, inefficiency brought on by social distancing, and difficulty convincing employees that it is safe to come to work. Manufacturers believed the worst declines in demand may have passed in April, though the outlook for the rest of the year was still downbeat. Additionally, some contacts were optimistic that their current backlogs would tide them over until demand picks up again.

Professional and Business Services

Customer demand for professional and business services was mixed. One online shopping consultant reported an increase in demand in recent weeks, as did another contact who provides legal and strategic advice. A corporate strategy advisor reported that customers have recently started enquiring about potential investment projects. By contrast, several contacts in a variety of industries such as advertising consulting, landscape development, robotics, and payroll support reported continuing subdued demand for their services.

Fifth District  --  Richmond (MD, NC, SC, VA & WV)  return to District list

Economic activity in the Fifth District continued to decline after the sharp fall reported in our previous Beige Book. Manufacturers experienced declines in shipments and new orders, as well as cancellations of exiting orders, leaving some with excess inventories.... Travel and tourism remained depressed with hotels reporting little occupancy outside of some health care and construction workers. Some restaurants pivoted to carry-out sales, while others remained closed. ... Employment continued to decline sharply in recent weeks. Wages were little changed, overall, but there were a few reports of temporary wage increases or bonuses to keep workers on payrolls. Price growth slowed slightly but remained at a modest pace, overall.

Employment and Wages

Overall, employment continued to decline sharply in recent weeks. The only reports of firms hiring or looking to hire came from high demand industries, such as food manufacturing, logistics, cleaning services, and some segments of retail. Also, some employers noted that while they didn't lay off staff, they did reduce the number of hours they worked. Others expressed difficulties retaining or rehiring workers because they had child or elder care responsibilities, or because it was more financially beneficial to collect unemployment insurance. While there were few reports of permanent wage increases, there were several reports of employers temporarily increasing wages to retain essential on-site staff, to match the amount employees could earn on unemployment, or to reduce absenteeism.

Manufacturers reported steep declines in shipments and new orders since our last report. Firms also reported a rise in cancellations of existing orders, which led to inventory build-up and a need for more storage capacity. A meat processor reported a decline in production as some plants shut down after employees tested positive for COVID-19. A prepared food manufacturer reported a decline in sales as panicked buying led customers to purchase frozen and canned foods, but was optimistic that people would start to transition back.

Nonfinancial Services

On balance, nonfinancial services firms saw a moderate decline in demand and revenues since our previous report. Hospitals and health care service providers reported sharp declines in revenues and total volumes, overall, because of the limitations on non-COVID-19-related services such as elective surgeries. Higher education institutions in the Fifth District also reported declines in revenues, largely due to reimbursements made to students for forgone room and board. Demand for professional services were mixed. For example, an accounting firms saw a modest reduction in business while a marketing company said sales were up, although the number of clients was down.

Sixth District business contacts reported that economic activity continued to decline from April to early May due to the COVID-19 pandemic. Labor market activity remained weak and nonlabor costs declined overall. ... Overall, manufacturing activity contracted and new orders declined significantly. ...

Employment and Wages

Overall, District labor markets continued to deteriorate from closures related to the COVID-19 pandemic and the resulting decline in demand for products and services. Several contacts noted they were redeploying workers from low to high demand areas within their organization. Many contacts reported success in securing a PPP loan, which allowed them to avoid layoffs. Although more furloughs and layoffs were announced, most contacts were furloughing employees with medical benefits rather than laying off in hopes of re-engaging them when demand returned. Several employers noted concern that the generosity of unemployment benefits may make it difficult to attract workers once demand improves especially among lower paid jobs. Most contacts noted that they had frozen or slowed hiring with the notable exception of high demand sectors such as grocery and home improvement stores.

Contacts noted that weaker demand resulted in more reports of pay cuts, elimination of bonuses, and reduced hours; these cuts were more broad based than in the previous report. Some temporary increase in hourly wages and bonuses continued to be reported among high demand or essential workers, however there was no evidence that these inducements were increasing substantially or spreading to other sectors.

Manufacturing

Manufacturing firms reported a decrease in overall business activity, steered by a notable decline in new orders. To adjust to weakening demand, contacts described lowering production levels by reducing capacity and, in some instances, temporarily halting production at some of their plants. Some purchasing managers indicated they were experiencing delays in deliveries due to disruptions in supply chains. Across the board, contacts had or planned to implement enhanced safety procedures at their plants to promote social distancing and to provide a sanitary work environment.

Seventh District  --  Chicago (IA, IL, IN, MI & WI)  return to District list

Economic activity in the Seventh District declined sharply in April and early May, as the spread of the coronavirus caused major economic upheaval. Contacts were split over whether activity would decline further or pick up during the next 3 months, and they largely expected full recovery to take more than a year. Employment, consumer spending, business spending, construction and real estate, manufacturing, and agriculture all decreased substantially. Wages edged up and prices were little changed. ...

Total employment fell dramatically over the reporting period, with especially large declines in the retail, leisure and hospitality, and auto industries. That said, many contacts reported little change in employment, and a staffing firm that primarily serves manufacturers said that workers were beginning to return from furloughs. Many contacts who received a Paycheck Protection Plan (PPP) loan said that they were avoiding layoffs in order to qualify for the loan forgiveness provision of the program. Still, a number of other contacts reported challenges in meeting the PPP loan forgiveness requirement, with some saying that generous unemployment benefits were making it difficult to bring payrolls back to necessary levels. Contacts again indicated they were making major changes in work environments to protect employees against the coronavirus. Wages edged up overall, with reports of workers at many essential businesses receiving bonuses or raises. ...

Manufacturing production decreased substantially in April and early May. Auto production was very low as many assemblers and suppliers remained shut down. While many automakers in the US planned to resume production in the middle of May, there was concern over supply chains due to uncertainty about when factories in Mexico would reopen. ...

Economic conditions have declined since mid-April, but at a moderately slower pace. While a very small fraction of firms had closed permanently, around half of firms remain closed temporarily. Among the firms that are closed, about one-third expect to reopen in the next 3 weeks, one-quarter in the next 3 to 5 weeks, one-quarter in the next 5 to 10 weeks, and the remainder in more than 10 weeks. Firms that are reopening are often doing so for training and preparation purposes; less than one-fifth expect demand for their products or services to pick up in the next 5 weeks. ...

Employment and Wages

Labor markets have continued to decline sharply over the reporting period, although the pace of decline has slowed considerably, with some contacts attributing employment stability to PPP funding. A payroll contact reported that new layoffs were driven predominantly by small firms, though many large employers have also furloughed workers since March — notably, several healthcare systems. Contacts reported that reopening firms were limited by labor shortages, which they ascribed to increased unemployment benefits, personal health concerns, and childcare responsibilities leading potential workers to stay home.

Wages and other benefits were lower than in our previous report; a payroll company reported a "second wave" of wage cuts, and reports across industries have mentioned cuts to benefits, including employer 401k matching. Some companies, especially those in competitive fields, have promised to repay lost wages at the end of the crisis; and others have increased wages to maintain morale and lure back hesitant workers.

Manufacturing

Reports from manufacturing contacts were mixed. However, levels of production remain very low. A steel manufacturer reported a 30% reduction in production, and a machine products manufacturer reported a 50% reduction in production. Both these contacts cited reduced demand as their biggest impediment. A printing company reported sharp increases in production from 15% to 80% of normal levels. Furthermore, several auto plants in the region have reopened or plan to reopen within a couple of weeks, but are working at 25% to 50% of normal production levels with supply chain disruptions.

Nonfinancial Services

Activity in the nonfinancial services sector has worsened moderately since the previous report. On net, about one-third of contacts expect that it will take more than 10 weeks for demand for services to begin to improve. Contacts in the healthcare sector reported severe drops in non-COVID-19 patient visits, by as much as 50% since March. Elective surgeries have been postponed by hospitals. Contacts reported furloughing between 5% to 33% of their workforce. Contacts in primary care note the use of telehealth to replace some, but not all, patient visits. ...

Ninth District  --  Minneapolis (MI, MN, MT, ND, SD & WI)  return to District list

Ninth District economic activity declined further after falling substantially in the previous report, due to the COVID-19 pandemic and response. Employment fell significantly, and wage pressures fell overall due to the steep decline in activity, while price pressures remained modest on balance. The District economy saw declines in consumer spending, tourism, services, construction and real estate, manufacturing, energy, mining, and agriculture.

Tenth District economic activity declined substantially since the previous survey, and contacts remained pessimistic about activity levels in the months ahead despite some easing of restrictions related to COVID-19. Consumer spending decreased at a faster pace in April and early May, with particularly weak sales at auto, restaurant, tourism and healthcare establishments. Manufacturers reported a record drop in activity as production plunged at both durable and non-durable goods plants in April. ... District employment fell sharply over the past two months, but the pace of job losses moderated some in the last couple of weeks. Wages fell modestly, and input and selling prices declined across most District sectors.

Employment and Wages

District employment and employee hours were down moderately compared to the prior survey period and were substantially below year-ago levels. After a dramatic spike in initial claims for unemployment insurance in late March and April, the number of new claims declined in recent weeks but remained historically high. However, contacts in all sectors, with the exception of retail trade and real estate, expected continued declines in employment over the next few months, albeit at a more moderate pace.

A majority of respondents continued to report no labor shortages, but some contacts did note difficulties finding truck drivers and hourly food-service workers. Wages fell modestly, but slight gains were expected in the coming months.

Manufacturing and Other Business Activity

Manufacturing activity fell at a record pace in April as COVID-19 continued to weigh on firms. The decrease in manufacturing activity was steepest at durable goods factories such as primary and fabricated metals, but activity at non-durable goods plants including food and beverage manufacturing also declined. Production, new orders, employment, and raw materials inventories all dropped further compared to the previous survey period and year-ago levels. On the other hand, supplier delivery time increased. More than two-thirds of factory contacts reported applying for SBA PPP loans. ...

Outside of manufacturing, sales decreased for firms in the transportation sector, and several firms reported layoffs and increased use of paid time off for employees since the previous survey period. Recent sales declined for wholesale trade, but remained around year-ago levels. ...mployment levels, capital expenditures, and prices in coming months.

Eleventh District  --  Dallas (LA, NM & TX)  return to District list

Eleventh District economic activity contracted sharply in April, while preliminary data from May point to a notable easing in the pace of decline as restrictions on businesses were gradually lifted. Activity in the energy and service sectors remained the hardest hit. Manufacturing output and new orders fell further, though food manufacturing continued to increase. ... Employment and hours worked continued to plummet, pressuring wages. ... Preliminary results from a May Dallas Fed Survey of Texas manufacturing and service firms indicated that current revenue levels for most respondents were down markedly compared with a typical May, and about a fifth said they would not be able to survive past six months if revenues did not improve. Outlooks remained weak due to uncertainty surrounding the pace and scope of the reopening of the District economy.

Employment and Wages

Employment declines were steep, spanning all metros and most industries. An April Dallas Fed survey of 400 Texas businesses in the services and manufacturing sectors showed that 47 percent of respondents had either temporarily or permanently laid off workers and 63 percent had cut hours. ... A large rail firm said they have furloughed about 5,000 workers due to decreased traffic, and there were a few reports of employment cuts in real estate and construction. In contrast, a food manufacturer noted difficulty finding workers and a few finance firms said they were adding employees or using overtime to process PPP loans. Some companies said PPP funding had helped them hold on to employees.

Firms that were beginning to call workers back said that fear of infection, lack of childcare, and generous unemployment insurance (UI) benefits were preventing some workers from returning. A few staffing firms noted difficulty recruiting due to increased UI benefits. ...

Manufacturing

Nonfinancial Services

Activity in the service sector remained depressed, though the rate of decline appeared to moderate in May relative to April. A few firms that cited rising revenues noted strong backlogs, increased demand stemming from the current economic distress, or a pickup in demand from a very weak April. Firms noting continued weakness generally reported low levels of demand, particularly in travel, accommodation, and food services. ... Staffing firms saw a drop off in orders, though there were reports of increased demand for workers in healthcare, nursing, logistics, and trucking. Service sector outlooks were largely pessimistic.

Economic activity in the Twelfth District contracted markedly during the reporting period of April through mid-May. Most businesses reported dramatic employment declines, due to disruptions related to the COVID-19 outbreak. Changes in wages were mixed. ... Sales of retail goods declined sharply, and activity for providers of consumer and business services contracted noticeably. Manufacturing contracted moderately, and activity in the agriculture sector slowed further. ...

Employment and Wages

Business disruptions related to the COVID-19 outbreak caused a surge in layoffs and furloughs over the reporting period. Many nonessential businesses reported double-digit percent reductions in their employment levels as well as cancelled hiring plans. Businesses in the entertainment, food services, retail, and tourism sectors were among the more severely affected. A large specialty retailer laid off or furloughed 85 percent of its employees. Conversely, some banks either maintained or increased hiring levels to accommodate increased demand for PPP loans. Some customer-facing essential businesses mentioned that some separations came at the request of employees who were afraid of contracting the coronavirus. Other contacts noted that some workers' current ability to receive more income through unemployment insurance and other social programs than through employment has hindered employee retention and rehiring efforts. Contacts across the District reported cutting workers' hours. Work arrangements became more flexible where possible, including teleworking and expanded leave periods. A banker in Central California recorded increases in worker absences of up to 10 percent primarily due to a lack of available childcare. A payment processing firm reported that job applications for current openings soared, though many candidates did not have the stated requirements. ...

Manufacturing

Manufacturing activity declined moderately. Reduced global industrial activity negatively impacted sales, availability of raw materials, distribution networks, and capacity utilization. Demand for finished steel products decreased significantly, driven primarily by a suspension in auto production and lower demand from energy producers. A large metal manufacturer in the Pacific Northwest mentioned that capacity utilization is now below the long-term U.S. average. Manufacturers of building products saw reduced sales and limited production schedules, though one producer observed a pickup in demand as construction sites reopened in late April in some areas. ...

© 2019, Bruce Steinberg.  All rights reserved.

last updated May 27, 2020