September 2020 Federal Reserve Board's Beige Book

DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on September 2, 2020. It "... was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before August 24, 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

Business activity continued to pick up modestly in the First District in July and early August, even as some sectors saw little improvement. ... Manufacturing and staffing results were similarly mixed, with results largely a function of the pandemic's effects on the sectors of the firms' clients or customers. ... Outlooks continued to be highly uncertain, with more respondents expecting at least mild improvement than predicting increased losses.

Employment and Wages

Employment changes were mixed. Retail contacts selling autos and furniture brought back almost their entire workforces after layoffs and furloughs in the spring. By contrast, many hotel workers remained furloughed, particularly food and beverage staff that typically work larger functions. ... Some manufacturing contacts giving "hazard pay" to employees said they planned to stop doing so, but one said that they would continue the practice for fear of damaging morale. Staffing firms also noted that hazard pay for some jobs had been eliminated. Some clients of staffing firms raised pay compared to pre-pandemic levels to enhance recruitment.

Manufacturing and Related Services

Experiences diverged markedly across the ten manufacturing firms contacted this cycle. Firms with exposure to home goods, semiconductors, and health care reported strong results, even compared with a year ago, while firms with exposure to aviation and automotive continued to suffer. A manufacturer and retailer of furniture reported that sales in the summer were up 30 percent year-on-year. Semiconductor firms reported significant increases in sales which they attributed to demand for devices and the upcoming release of a new iPhone. ...

One manufacturer said that they were increasing capital expenditures both because of discounts on capital goods and because they wanted to be in position to take market share when the economy recovers. Other firms said they faced COVID-related delays in construction or acquisition of capital goods. ...

Contacts said they expected current performance, whether good or bad, to continue in the near term.

Staffing Services

New England staffing firms reported mixed business results into August, reflecting their different industry exposures. Firms that provide services to COVID-related industries, particularly healthcare, continued to see improvement and business growth since the spring. Most contacts indicated that labor demand is the same as or higher than in the spring. Some client organizations called back temporary workers whose jobs could not be done remotely; some moved from entirely virtual hiring to conducting the last round of interviews on-site.

Labor supply was described as complex. The majority of contacts reported difficulty finding candidates who were willing to work, especially for pay rates that might be lower than pandemic-augmented unemployment benefits. A lack of access to daycare and unwillingness of some working parents to send their children to daycare contributed to a reduced pool of candidates. By contrast, one contact saw increased applicants, citing recent layoffs and furloughs as driving factors.

Overall, respondents remained cautious about the uncertainty of the COVID situation and the upcoming election. The majority of contacts were somewhat more optimistic than three months ago, but a few were less optimistic and expected business activity to slow in Q3 and Q4.

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

Economic growth in the Second District economy has stalled in the latest reporting period, even as the spread of the virus has remained subdued and more businesses have gradually reopened. Employment overall has been little changed, though retailers and wholesalers have reported staff increases, as more restrictions have been lifted. ... Overall, business contacts have become less optimistic about the near-term outlook.

Employment and Wages

The labor market has been generally flat since the last report, though retailers and wholesalers indicated that they had added staff as more restrictions have been lifted. A major upstate New York employment agency and a payroll processing firm both reported that hiring activity has picked up somewhat since midyear. However, a major New York City agency specializing in office jobs indicated that hiring has remained sluggish, as fewer people are leaving jobs and companies have been reluctant to on-board new workers remotely. These contacts noted a marked increase in job seekers.

Some businesses have noted less trouble bringing back furloughed workers and hiring new ones in recent weeks, as unemployment benefits were scaled back. However, a number of companies noted that concerns about child care and the upcoming school year remain constraints on worker availability.

Business contacts have mixed expectations about their likely staffing levels in the months ahead. While more manufacturers said they anticipated staff increases than reductions, the reverse was true among service sector businesses — especially those in the information, transportation, and warehousing industries.

Wages have generally been mixed but mostly steady, on balance, with declines in leisure & hospitality, information, and wholesale trade, but increases in retail, real estate, and construction. Looking ahead, businesses generally expect wages to remain steady.

Manufacturing and Distribution

Manufacturing growth has slowed to a crawl in the latest reporting period, while activity in the wholesale trade and transportation & warehousing sectors has contracted modestly. A number of contacts in these sectors have noted difficulties and delays in getting a variety of inputs.

Looking ahead, manufacturers projected moderate growth in activity, while wholesalers and transportation & warehousing contacts anticipated little change. Businesses' overall capital spending plans remain depressed, though there have been scattered reports of companies investing in air filtration systems and other such equipment to enhance safety.

Services

Service industry contacts generally reported that business activity has weakened since the last report and remains well below pre-pandemic levels. Information and professional & business services firms reported fairly widespread declines in activity, while those in leisure & hospitality and education & health reported flat to modestly declining activity. The falloff in economic activity in central business districts, most notably Manhattan, has distressed local businesses that provide services to offices and workers, as well as firms throughout the metro area that service them. Contacts at both business service and consumer service firms generally anticipated little change in business activity the months ahead. ...

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

Third District business activity changed little overall during the current Beige Book period and remained far below levels observed prior to the onset of the COVID-19 pandemic. Business operations increased incrementally, as COVID-19 caseloads remained at relatively low levels throughout the period. As firms recalled more of their workforce, net employment also grew modestly; however, firms also continued to issue permanent layoffs. Some wage increases were noted among lower-paying jobs. Meanwhile, contacts reported ongoing difficulties attracting workers. Prices edged higher again amid continued spotty price spikes. Firms maintained modestly positive expectations for growth over the next six months; however, uncertainty is extremely high, as contacts worried about the end of stimulus measures, pending layoffs, and an inevitable rise of evictions, foreclosures, and bankruptcies. Looming over all is the active presence of the coronavirus.

Employment and Wages

Employment increased modestly overall as firms stepped up hiring and recalling workers; however, layoffs continued as well. Among firms in our COVID-19 survey, 25 percent reported that they had hired new workers in July, and 13 percent recalled furloughed workers. Meanwhile, about 6 percent of the firms had laid off workers permanently, and another 6 percent had furloughed workers. However, at mid-August, a slightly greater percentage of firms reported that employment had declined over the month than had increased.

Staffing firms reported that activity continued to increase but remained below pre-pandemic levels by as much as 30 percent. Staffing contacts noted far more orders than they can fill with available labor, and they worried – as the school year neared – that childcare issues will further reduce the labor supply. A lack of childcare was also the only impediment cited by a greater percentage of firms in our COVID-19 survey in late July than in early July. Fear of infection and expanded unemployment benefits had become lesser concerns. From a separate July survey of Philadelphia's Center City offices, a vaccine was the overwhelming factor that firms required for a return from remote work; safer transit was a distant second.

Wages appeared to trend slightly upward. In mid-August, the percentage of nonmanufacturing firms reporting higher wage and benefit costs per employee was higher than the percentage reporting lower costs. Manufacturers anticipate compensation costs to rise 3 percent over the next year – a bit higher than last quarter.

Several firms maintained previously imposed salary cuts on higher-paid positions, but further cuts were not reported. Upward wage pressure is most evident for lower-wage jobs, especially for Pennsylvania firms that are paying closer to the federal minimum than to the $15 an hour, or more, being offered by many warehouses. Also, some firms found it difficult to end the temporary "hero" pay and have made all or part of it permanent.

Manufacturing

On balance, manufacturers reported little or no change in activity during the current period. In our COVID-19 survey, manufacturing firms began the period with sales and new orders of about 11 percent below what had been anticipated pre-pandemic. Firms reported that demand was about 14 percent below expectations as of the end of July.

In contrast, positive but low diffusion indexes for shipments and for new orders from a mid-August survey suggested the possibility of slight growth. However, both indexes had fallen since mid-July, indicating that growth was less widespread among firms and that the overall direction of change was less certain.

Nonfinancial Services

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

The Fourth District's economy grew modestly and at a pace similar to that of the previous reporting period. However, sales and activity generally remained below pre-pandemic levels across most sectors. Staff levels changed very little in all sectors, even as business activity continued to increase. Consequently, wages were mostly steady. Input cost pressures increased somewhat as prices for construction materials, metals, and materials used in pandemic-related medical equipment rose. ... Contacts expected to add staff slowly in the months ahead, and the majority of firms believed that by next spring, their staff levels would still be below pre-pandemic levels.

Employment and Wages

Labor demand remained weak, and staff levels changed by little in all sectors, even as business activity increased. Fewer firms reduced staff levels in the past two months than in the previous period. However, only about one-fourth of contacts added workers, a share which was unchanged from the previous period. Firms noted that the weak level of customer demand was the primary reason for their lackluster hiring activity. Although the labor market is more stable than it was during the spring, a few firms reported that previously furloughed workers have recently been laid off permanently — a sign that the labor market's recovery may not be smooth. Contacts expected to add staff slowly, and the majority of firms believed that by next spring their staff levels would still be below pre-pandemic levels. Most believed customer demand would not be strong enough to support pre-pandemic staff levels, but a sizeable minority noted their firms had become more efficient and did not need as many workers as they had at the beginning of the year. 

Wages were mostly steady, with 8 out of 10 firms reporting no change in the past two months and with fewer firms cutting pay. Where pay increases were noted, a number of staffing agencies reported that before enhanced unemployment benefits had expired, the benefits motivated them to raise wages to attract workers. Also, a few firms reported that professional staff whose wages had been previously cut have had those wages restored.

Manufacturing

Manufacturing activity improved slightly, although there was variation in performance and production remains below pre-pandemic levels. Steelmakers saw a boost to sales from the growth in auto production and from customers who were making purchases that had been delayed. Food and beverage producers also noted growth, thanks to continued growth in consumer spending. Also, strength in residential construction boosted demand for electrical equipment used in homes. ... On balance, contacts expect demand to improve slowly over the next few months, although expectations have been scaled back since the previous period.

Professional and Business Services

Most professional services firms reported stronger business activity. IT firms experienced strong demand as firms adapted to a virtual work environment. Demand for payroll processing increased as more businesses reopened, and the continued shift toward online purchases heightened demand for transaction authentication services. An accountancy firm with a national footprint noted that deal flow had improved. Similarly, a large consultancy reported some clients restarted longer-term projects that were previously put on hold. Contacts expect demand to remain on a positive trajectory.

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

The Fifth District economy continued to expand in recent weeks, but activity remained below pre-pandemic and year-ago levels. Manufacturers experienced a moderate increase in new orders and shipments, on balance, but demand was described as unreliable and varied across different goods. ... Overall, demand for nonfinancial services increased slightly, but reports varied. Some firms said that workplace safety measures led to increased costs. Employment continued to increase, but the pace of hiring slowed and many businesses report having difficulty filling open positions. Price growth picked up in recent weeks, but remained modest, overall.

Employment and Wages

Employment in the Fifth District continued to rise in recent weeks, but the pace of hiring slowed compared to our previous report. There were several reports of employers having difficulty filling open positions. Some contacts cited skills mismatches as a barrier to finding the workers they needed while others believed that the generous unemployment insurance benefits had discouraged workers from applying for available jobs. Also, multiple contacts said that some former employees were recalled but did not report back to work. Many firms said they were trying to figure out how to provide flexibility to workers with children schooling at home. On balance, wages were unchanged.

Manufacturing

Fifth District manufacturers reported a moderate increase in shipments and new orders since our last report. Several contacts said that demand was unreliable while others expressed concerns about growing uncertainty relating to COVID and the upcoming presidential election. Manufacturers of food and home goods such as furniture reported strong business, but some manufacturers further up the supply chain struggled as uncertainty led to caution among customers and reduced orders. Several companies reported that supply chain disruptions were restricting production and that tariffs on inputs were hurting profits.

Nonfinancial Services

Nonfinancial services firms indicated a slight increase in demand in recent weeks, but individual reports varied considerably. Business that rely on events and in-person visits with clients, for example, reported very low levels of sales and revenue. Firms that provide services through federal government contracts, on the other hand, noted an increase in COVID-related contracts. A few businesses said that while their primary concern was the safety of their customers and employees, the additional safety measures were costly.

Reports on economic activity in the Sixth District were mixed. Labor markets continued to modestly improve as firms slowly recalled workers. Nonlabor costs remained muted. ... Overall manufacturing activity accelerated somewhat, though new orders and production levels varied across firms. ...

Employment and Wages

Although labor conditions improved modestly since the previous report, payrolls remain below pre-COVID levels and the outlook for further improvements was less certain. Firms continued to slowly recall workers as demand returned. However, many contacts noted that some prior staff cutbacks were permanent, and others had used attrition to reduce headcount. Among those hiring, most indicated that the pool of available workers was ample, although there were reports that unemployment insurance benefits continued to present challenges attracting low-wage workers. Several contacts reported that employees quarantined while waiting for COVID-19 test results was disrupting operations. Many employers also expressed growing concern about workers' abilities to balance workloads with the demands of childcare and a return to school or virtual learning environments.

Reports on wages and compensation varied among contacts. Some businesses rescinded salary cuts, while others maintained pay cuts, froze salaries, or eliminated bonuses and/or contributions to 401K plans. Wage increases remained concentrated at the low-end of the pay scale.

Manufacturing

While most manufacturing firms reported a modest acceleration in overall business activity compared with the previous report, the level of activity remains slightly below pre-COVID levels. While many contacts indicated that new orders and production levels increased, reports of subdued demand at some firms persisted. Purchasing managers reported a slight increase in supply delivery times and a decline in finished inventory levels. Expectations for future production levels increased, with nearly half of contacts expecting higher levels of production over the next six months.

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

Economic activity in the Seventh District again increased strongly in July and early August, but the pace of growth was slower than the prior reporting period and activity remained well below its pre-pandemic level. Contacts expected further growth in the coming months, but most did not expect a full recovery until at least the second half of 2021. Employment and manufacturing increased strongly; consumer spending and construction and real estate increased moderately; and business spending increased slightly. Wages increased slightly and prices rose modestly. Financial conditions also improved modestly. ...

Employment and Wages

Employment overall increased strongly during the reporting period, though a large number of contacts made little or no change to their staffing levels. One said that the Paycheck Protection Program (PPP) had allowed his firm to retain workers during the depths of the downturn and was sparing them the difficulty of searching for workers now that activity was picking up. A number of contacts in manufacturing reported they were maintaining higher employment levels than usual because of elevated rates of absenteeism as workers with a positive COVID test or potential exposure had to quarantine. Several contacts again commented that generous unemployment benefits had made it difficult to bring payrolls back to desired levels, especially at the entry level. Wages increased slightly across skill levels. Benefits costs also moved up some.

Business Spending

Business spending increased slightly in July and early August. Many retailers continued to struggle with inventory positions: one contact noted that nonessential retailers were being "careful on inventory" and did not want to over-order, while others reported low inventories of light trucks, boats, RVs, and many grocery items. Overall, manufacturers said inventories were somewhat higher than comfortable, and a number continued to report minor supply chain problems. Capital expenditures were little changed, and many contacts said they had paused expansion plans for the year. ...

Manufacturing

Manufacturing production increased strongly in July and early August, but remained below where it was before the pandemic began. Auto production again grew sharply, though the pace of growth was slower than the previous reporting period. Steel production increased moderately, led by increased demand from the auto and construction industries. Heavy machinery manufacturers reported a slight decline in orders because of lower demand from the mining and energy sectors. Sales at specialty metals manufacturers increased modestly due to growth in demand from the auto, medical, and food manufacturing sectors. Demand for heavy trucks increased, but remained at low levels. Manufacturers of building materials reported a modest increase in shipments.

Reports from District contacts suggest economic activity has increased modestly, but losses sustained during the pandemic have yet to be fully recouped. Activity was also highly variable across sectors. Employment increased modestly while wage growth was mixed. ...

Employment and Wages

The labor market has improved modestly since the previous report. Contacts across many industries reported hiring or rehiring workers, though they frequently reported difficulty doing so, citing potential workers' continuing health concerns and childcare obligations. A manufacturing contact reported that it was challenging to hire enough workers to staff half the plant's usual number of shifts. An employment agency stated that it was "not uncommon" for those it matched to jobs to quit within 48 hours. Service, hospitality, and healthcare firms continued to report more mixed employment trends, as did smaller firms. Some larger firms also reported laying off furloughed workers in the face of slower recovery.

Wage growth has been mixed, with wages at small firms remaining especially stagnant. On net, 15% of contacts reported that wages were up since this time last year — less than half the number who usually report such increases. Some firms reported increasing pay to attract scarce workers: One peach farmer reported that a 10% pay increase for his packaging workers still left him so short-staffed he had to leave some of his crop unharvested.

Manufacturing

Manufacturing activity has moderately increased since our previous report. Multiple steel manufacturing contacts reported that they are now working at full capacity. Plastics manufacturers in southern Indiana reported a surge in production. Contacts in Louisville reported that the automotive production continues to lag, but that most automotive plants are in the process of resuming operations due to the resolution of supply chain problems. Survey-based indices indicate that production, new orders, and capacity utilization are on average still slightly lower than they were a year ago. On average, contacts expect production, new orders, and capacity utilization next quarter to be nearly back to their levels from one year ago.

Nonfinancial Services

Activity in the nonfinancial service sector has improved slightly since the previous report. Airport passenger traffic has nearly doubled month over month, although levels are still down roughly 80% relative to this time last year. ... A logistics firm was able to raise wages and expand its workforce. Hospital contacts noted that in-patient and ambulatory volumes have reached 90% of pre-crisis levels. However, hospitals indicate that they continue to deal with large numbers of COVID-19 patients. As a result, research remains sidelined and wholly devoted to COVID-19. Moreover, fellowship and residency programs are temporarily on hold. Hospital contacts noted that furloughed staff have begun to return in phases and hiring for physicians and nurses continues. Dentists and optometrists have reported increased activity, as patients who delayed care are now seeking treatment.

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

Ninth District economic activity grew slightly since the previous report, but remained well below its prepandemic benchmark. Employment was mixed, wage pressures fell moderately, and price pressures generally remained modest. The District economy saw growth in consumer spending, tourism, manufacturing, residential construction and real estate, and mining. Agriculture was mixed, while services, commercial construction and real estate, and energy declined.

Tenth District economic activity continued to strengthen in July and August. Overall, the economy expanded moderately, but activity in many sectors still remained below pre-pandemic levels. Consumer spending increased moderately as all subsectors reported improvement. In the months ahead, retail and auto contacts expected growth to continue, while tourism and restaurant contacts were more pessimistic. Manufacturing activity picked up, with both non-durable and durable goods producers reporting higher levels of production and new orders. Durable goods activity remained well below year-ago levels, but additional gains were expected in the next few months. Sales also picked up in the transportation, wholesale trade, and professional and high-tech sectors, and moderate growth was anticipated in coming months. ... District employment rebounded further in July and August, but was still moderately below year-ago levels. Wages rose slightly, while overall input and selling prices increased at a modest pace.

Employment and Wages

District employment increased modestly since the last survey period but remained moderately below year-ago levels. The biggest gains were in real estate, transportation and tourism sectors, but despite these gains, tourism and transportation employment was still well below a year ago. Manufacturing, wholesale trade, and professional and high-tech employment rose modestly for the first time since declining this spring. Overall employment expectations improved in August, with manufacturers expecting moderate gains and services contacts expecting slight gains in the months ahead.

Respondents were split regarding labor shortages, with many reporting a need for truck drivers, mechanics, and restaurant workers. Wages rose slightly, and modest gains were expected in the coming months.

Manufacturing and Other Business Activity

Manufacturing activity expanded for the second consecutive survey period, and strengthened in August to a moderate pace of growth. Gains in the non-durable goods sector outpaced those in the durables goods sector, but contacts in both sectors noted positive growth. Production and new orders increased robustly in the non-durable goods sector, leading to overall activity levels that were slightly above a year ago. Production and new orders rose modestly in the durable goods sector, but activity remained moderately down from year-ago levels. Many respondents indicated that if government support were to diminish in the next six months, more furloughs or layoffs would be needed. Expectations rose moderately regarding production and new orders, but capital expenditures were expected to remain roughly flat.

Outside of manufacturing, sales in the transportation and wholesale sectors increased moderately compared to the last survey. Sales in professional and high-tech services showed modest improvement but remained moderately below year-ago levels. Contacts in wholesale trade, transportation, and professional and high-tech services sectors expected moderate increases in sales in the coming months. Expectations for capital expenditures were mixed across sectors.

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

Increasing COVID-19 infections in the Eleventh District have disrupted the budding economic recovery in some sectors and is the biggest risk to the near-term outlook. While manufacturing activity continued to expand and loan volumes increased in the financial sector, service sector activity declined overall in July but resumed its nascent recovery in August. ... Employment remained fairly stable, according to contacts. ... Outlooks were increasingly uncertain, with numerous contacts expressing concern over surging COVID-19 cases and the resulting disruption to business.

Employment and Wages

Most contacts reported steady employment, though there were some reports of either layoffs or increased headcounts. Employment declines were centered in the energy industry and parts of the service sector. Manufacturing jobs recovered somewhat as more firms noted net hiring than noted net layoffs for the first time since January. Jobs grew in health care and professional and business services, while contacts more often noted employment declines in retail, leisure and hospitality, and transportation services. Energy contacts said more layoffs are coming, but that the worst is likely past.

Nonfinancial Services

Service sector activity declined overall in July after a short-lived expansion in June, but modest growth resumed in August. Face-to-face contact industries, such as leisure and hospitality, suffered as new COVID-19 cases rose sharply in Texas in July. However, while hotels have been hit hard, the single-family vacation rental market has been very strong. ... Colleges and universities across the district face logistical and financial challenges as they shift their fall semesters to a partially virtual environment with limited on-site learning and experience reduced enrollment. Some industries, like professional services, were less affected by COVID-19 trends and saw increased revenues in both July and August. Staffing contacts noted demand was stable recently but down year over year.

Roughly three-quarters of contacts said July revenues were below normal, by just over 30 percent on average. This magnitude of the shortfall was higher for leisure and hospitality firms, who said July revenues were off 46 percent, on average.

Outlooks worsened in July but improved in August, though uncertainty continued to climb, particularly regarding COVID-19 and the presidential election. When asked how likely it is that their business will permanently shut down within the next 12 months, 90 percent of contacts said it is not likely. Among leisure and hospitality firms, though, more than a quarter say it is at least somewhat likely their business will not survive to next July.

Economic activity in the Twelfth District expanded slightly on balance during the reporting period of July through mid-August. Employment levels increased marginally, but hiring was curtailed by firms' cost-containing efforts. Wages were generally stable, as was price inflation. Sales of retail goods rose slightly, while conditions in the consumer and business services sectors remained precarious. Manufacturing activity increased modestly. ...

Employment and Wages

Employment levels increased marginally on net, but many employers curtailed hiring efforts to control costs in the challenging economic environment. Some metal and wood manufacturing facilities returned to operating full-time and added workers due to increased demand. A large transportation and logistics services provider increased entry-level job recruiting but froze manager searches. Most health-care and financial services providers noted restrictions on new hiring and overall flat employment levels, though a payment-processing firm in the Pacific Northwest reported actively hiring for several positions. ... Some manufacturers expressed difficulties in finding skilled labor. ... A few employers reported increased use of flexible schedules, or in some cases absenteeism, due to concerns about COVID-19 exposure, childcare, or schooling alternatives.

Wages remained flat overall. Most employers reported unchanged wages over the reporting period, partially due to cost containment efforts and uncertainty. In California and Oregon, wages at the bottom of the distribution saw a slight increase due to the implementation of new minimum wage regulations in July. Building materials manufacturers in California and the Pacific Northwest reported reinstating cost-of-living wage adjustments, retracting previous wage cuts, or offering widespread wage increases due to a brisk increase in demand. Conversely, some retailers eliminated hazard pay bonuses for their employees.

Manufacturing

Manufacturing activity increased modestly over the reporting period, but remains considerably below pre-pandemic levels. Demand for recycled metals and finished steel products strengthened as auto production and construction continued to pick up, though capacity utilization rates remained at about three-quarters of their year-ago levels. Building materials manufacturers have also benefited from increased construction activity, with a wood product manufacturer in the Pacific Northwest reporting many sawmills returning to normal working hours or even overtime. Energy usage by manufacturers across the District also rebounded, while a renewable energy equipment producer in California mentioned pent-up demand for its domestic output. Some manufacturers reported more challenging conditions depending on industry, raw material availability, and severity of supply chain disruptions.

© 2020, Bruce Steinberg.  All rights reserved.

last updated September 02, 2020