July 2020 Federal Reserve Board's Beige Book

DISCLAIMER: Below are excerpts from the Federal Reserve Board's Beige Book published on July 15, 2020. It "... was prepared at the Federal Reserve Bank of Chicago based on information collected on or before July 6, 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 picked up somewhat in the second half of May and June, according to First District business contacts, but largely remained well below year-earlier levels. Retailers reported increased sales in June, with some online purchases exceeding June 2019. Tourism contacts cited much-improved summer bookings in coastal areas compared with cancellations in April and May. Manufacturing results were mixed, but most reported rising revenues. Software and information technology services firms said their businesses were holding steady, with declines in new orders but continuing strength from existing customers. ...

Employment and Wages

Employment changes were mixed across firms and sectors. One retailer brought back all corporate staff full time on July 1 and plans to bring about 1,800 furloughed warehouse and store employees back to work in August. An online retailer is hiring more workers, particularly customer service, to meet increased demand. Employment among manufacturers was mixed, with some firms hiring many workers and others engaging in layoffs and furloughs. An aerospace manufacturer laid off 7 percent of its workforce and cut salaries for all employees including senior executives. A toy maker furloughed salespeople and complained that production workers had not returned because of generous UI benefits. Responding software and IT services firms said they have continued to pay employees fully, partly funded by declines in operating expenses due to travel cutbacks. Headcount was down since last quarter at two software firms that froze hiring. By contrast, one IT firm continued to hire and said other layoffs in tech made it possible for them to bring on new highly skilled workers.

Manufacturing and Related Services

Experiences varied widely across the eight manufacturing firms contacted this cycle. A frozen fish producer and a maker of cardboard boxes reported very strong demand and sales; the box company said that sales growth slowed in June but was still strong. A toy company said that business had slowed significantly since April, partly because the cessation of movie production hit their media tie-ins, and partly because of production difficulties. An aerospace company said that while defense sales remained strong, commercial aviation declined. Idle planes mean no demand for aftermarket parts; in addition, build rates for new planes are falling because the travel recession is expected to last until 2022 and consequently airlines do not want to take delivery of new planes. A manufacturer and retailer of furniture which closed in March has reopened and hired back most of its employees after securing PPP funding and seeing demand pick up... .

The outlook was somewhat mixed. Most respondents said they expected business to improve over the rest of the year, but the toy maker said they would make significant staff cuts if sales did not improve by August.

Software and Information Technology Services

Activity at software and IT services firms in the First District remained mostly stable throughout the most recent quarter. All firms reported significant declines in new bookings, but steady revenue from existing customers. The majority of firms expected to see flat to 2 percent revenue growth, with another firm anticipating low double-digit growth year-over-year attributable to a cloud-based software acquisition finalized earlier this year. Multiple firms noted that what recent demand they have seen, has mostly been for cloud-based product lines.

Respondents were split in terms of optimism, with most remaining concerned regarding the U.S. economy. One medical technology contact noted that their elevated uncertainty may linger through the end of the year as hospitals remain focused on the pandemic. Contacts that reported being more optimistic than last quarter generally cited increased demand for cloud-based services and increased certainty regarding remote operations.

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

The Second District economy rebounded moderately in the latest reporting period, following a steep contraction, as the spread of the virus subsided and businesses began to reopen. Employment came off its lows across most industry sectors, while wages were steady, on balance. ... Business contacts have grown considerably more optimistic about the near-term outlook, though many businesses expressed concern about PPP loans running out or not being forgiven. Consumer spending has been mixed, but, on balance, has rebounded substantially — especially for vehicles. In contrast, tourism and travel have remained depressed. ...

Employment and Wages

The labor market has improved slightly, as businesses have begun to recall workers and some have added new workers. Most pandemic-related layoffs are still considered to be temporary, though one employment agency in upstate New York noted that some previously furloughed workers have more recently been laid off permanently. That agency along with another in New York City noted that hiring has remained sluggish. A number of contacts at firms providing various business and office services have reduced staffing levels, hours, and salaries. On balance, though, business contacts indicate that their staffing levels have rebounded at least moderately from the lows seen during the spring.

Some businesses have noted ongoing challenges in both bringing back furloughed workers and hiring new ones. Among the factors deterring workers are child care needs, safety concerns, and the generosity of unemployment benefits under the CARES Act.

Looking ahead, business contacts in most industries plan to increase staffing levels, on balance, in the months ahead. However, the information and professional & business service sectors, which had relatively mild layoffs, did not plan to expand staff overall.

Wages have generally been steady in recent weeks. One employment agency noted that wages have risen for lower-paid workers, whereas many businesses have cut salaries for managers and other highly-paid workers. Looking ahead, businesses generally expect wages to rise, on balance, though not in the business services, information, or leisure & hospitality sectors.

Manufacturing and Distribution

Manufacturing and wholesale trade activity have picked up modestly, while transportation & warehousing business has remained weak. New York State and New Jersey lifted restrictions on manufacturing and distribution businesses earlier than for most other sectors.

Looking ahead, manufacturers and wholesalers expressed increased optimism, while transportation & warehousing contacts were modestly optimistic. Capital spending plans of manufacturers have picked up a bit, but service firms have scaled back plans substantially.

Services

Service industry contacts reported some pickup in business but noted that activity has remained well below pre-pandemic levels. Contacts in leisure & hospitality and transportation -- the hardest hit sectors during the pandemic -- have noted scattered signs of improvement, though safety concerns have inhibited demand. ...

Health and education service providers report ongoing weakness in business and were not generally optimistic about the near-term outlook. Activity has also remained depressed in the information and professional & business services sectors, as many business customers have cut back on such services. There is widespread concern about when such business will rebound.

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

Third District business activity expanded moderately during the current Beige Book period but remained far below levels observed prior to the onset of the COVID-19 pandemic. Business operations resumed or increased, as lower COVID-19 caseloads prompted states to phase out stay-at-home orders and mandated closures. As firms recalled some of their workforce, net employment also grew moderately; however, firms continued to issue permanent layoffs as well. More firms have noted salary reductions than increases. Meanwhile, contacts noted difficulties attracting workers despite high unemployment rates. ...

Employment and Wages

As firms reopened and recalled workers, overall employment rebounded moderately. However, these net gains masked a small, steady stream of permanent layoffs. By mid-June, a modest percentage of firms reported that employment had declined over the month. Since then, an average of 11 percent of the firms in our weekly surveys reported that they had recalled furloughed workers in the prior week; 19 percent had hired new workers – sometimes to replace those who would not return to work. Meanwhile about 6 percent of the firms reported that they had furloughed workers, and another 4 percent reported that they had laid off workers permanently.

Staffing firms reported that activity was increasing but remained off pre-pandemic levels – sometimes as much as 40 percent. Despite elevated unemployment rates, firms often described the labor market as tight. By late June, almost half of the firms in our weekly survey reported that they faced no impediments to hiring workers. However, the remainder did note challenges.

Among nonmanufacturing firms, an equal 30 percent share of the contacts noted fear of infection, childcare needs, and expanded unemployment insurance (UI) benefits, respectively, as impediments. According to manufacturers, their workers tended to be less concerned about the virus but more attracted to the UI benefits than their nonmanufacturing counterparts. In the Philadelphia metro area, contacts noted reluctance from their transit-dependent workers to return to work or end telecommuting.

Wages appeared to trend slightly downward. In mid-June, the percentage of nonmanufacturing firms reporting lower wage and benefit costs was slightly higher than the percentage reporting higher costs. To trim expenses, more firms noted cutting salaries (with or without cutting hours). Most firms ended or were phasing out pay premiums to attract and retain frontline workers. Staffing firms noted that the lowest wage rates were holding steady, or rising slightly, but observed that clients, especially in parts of Pennsylvania, were still shifting their firm's wage structure toward a market-driven minimum that is about double the state minimum wage.

Manufacturing

Manufacturers reported a modest rebound in activity during the current period. At mid-June, over 40 percent of the firms reported increases in shipments and in new orders, while about 20 percent reported declines. When asked to estimate their total production changes, the median firm response was 25–30 percent lower for the second quarter compared with the first quarter of the year.

In our weekly survey, manufacturing firms began the period with sales and new orders of about 30 percent below what had been anticipated pre-pandemic. At the end of June, firms reported estimated demand about 18 percent below expectations.

Nonfinancial Services

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

After declining sharply in March and April, the Fourth District economy expanded in recent weeks as some firms resumed business operations. Contacts across most industry segments reported a rebound in activity during the early phases of reopening, although many suggested that the pace of improvement slowed as the reopening progressed. Most were also careful to point out that demand remained well below pre-pandemic levels despite the recent gains. Looking forward, contacts generally expected activity to pick up further in coming months. However, some questioned the sustainability of the pace of recovery amid a spike in new COVID cases across the country along with weak new orders and declining backlogs in some key industries. That uncertainty likely contributed to softness in capital spending and hiring plans. More than 40 percent of contacts cut capital spending plans since the last report, while less than 10 percent planned to spend more. Contacts across a wide array of industries indicated they were bringing idled workers back only slowly, and are unlikely to rehire all of them in the near term. Wages, nonlabor costs, and selling prices were generally flat-to-down.

Employment and Wages

Labor demand remained soft across most industry segments even as more of the District's economy came back on line. Half of contacts reported that staffing levels had not changed over the past two months, while the share reporting staff reductions was slightly larger than the share that reporting staff additions. Firms indicated that weak demand for their goods and services was the primary factor constraining hiring, but contacts also suggested that hiring was inhibited by workers' persistent fears of contracting the virus, a lack of child care, and generous unemployment insurance benefits.

Wages remained mostly flat as nearly three-quarters of contacts reported no change in the past two months. Many firms instituted formal pay freezes at the onset of the pandemic, while others temporarily put off merit increases until they were more confident in the sustainability of the recovery. More firms reportedly cut worker pay since the last report (particularly for higher salaried employees) and asked workers to take unpaid leave. Where wage increases were noted, contacts indicated that they were due to increased overtime and bonuses or COVID-related "hazard" pay.

Manufacturing

Manufacturing conditions improved modestly since the last report. Contacts indicated that manufacturing output reached its trough in mid-April and has been increasing since then. Firms that experienced an uptick in demand attributed this increase to more of their customers resuming operations, particularly in the District's auto industry. Despite the general improvement, demand remained below pre-pandemic levels overall and was particularly weak in the District's aerospace sector. Moreover, several contacts indicated that new orders were uneven and failed to keep pace with shipments, leading to shrinking backlogs. Nearly two-thirds of contacts expected demand to increase in the coming months, yet more than half suggested that they had decreased planned capital expenditures in order to preserve cash.

Professional and Business Services

Activity in professional and business services increased at a modest pace since the previous report, although it remained muted compared to a year earlier. As businesses continued to reopen, demand for payroll and other administrative services was returning, as was demand for marketing services. Technology companies that focus on work from home solutions have also seen an increase in demand as businesses prepare for possible future disruptions. Optimism increased significantly among contacts in the technology industry, as businesses will likely require many third party services in order to thrive in the "new normal" work environment.

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

The Fifth District economy grew compared to our prior report, although economic activity generally remained well below pre-COVID-19 levels. Manufacturers experienced a slight uptick in new orders but shipments of finished goods were little changed. ... Trucking companies, on the other hand, indicated a modest increase in demand as the reopening of stores and restaurants spurred new shipments. Retail shopping picked up modestly as more stores were able to reopen, but sales remained below year-ago levels. Leisure travel and tourism activity increased moderately, particularly at drivable locations. Business travel, in contrast, remained depressed. ... On balance, demand for nonfinancial services declined moderately. Employment rose moderately in recent weeks as many firms called back previously furloughed or laid-off workers; however, total employment remained well below pre-pandemic levels. ...

Employment and Wages

Since our previous report, employment increased as firms across a wide variety of industries reported calling some of their previously separated employees back to work, hiring new workers, and posting for vacant positions. Despite the rise in employment in recent weeks, total employment remained considerably below pre-pandemic levels. Several contacts noted challenges bringing workers back, including fear of contracting COVID-19 at work, inability to find childcare, or their ability to make more money on unemployment. While most firms reported no changes to wages or salaries, a few said that they cut hourly wages to reduce costs.

Manufacturing conditions in the Fifth District were little changed since our previous report. ... However, lost revenue forced some manufacturers to cut budgets and discretionary spending as well as cancel capital spending projects. Customers who were unable to pay for products created additional stress for manufacturers. Payroll Protection Program (PPP) loans allowed some companies to remain solvent. One firm that contracts with government agencies expressed concerns about government budget changes in the wake of the virus. Some firms were able to offset losses, by shifting production to COVID-related goods such as medical supplies or sneeze guards.

Nonfinancial Services

Nonfinancial services firms reported moderate declines in demand and revenues in recent weeks. Several contacts who engaged in business to business services, such as consulting, employee training, and marketing, said that their clients have reduced spending as a result of their own revenue declines. A few others said that revenue was down because they could not attend conventions and events, which typically generate new business for them. Lastly, an executive from a firm that provides services to federal government agencies expressed concerns that budget cuts would result in reduced demand in 2021 after current contracts expired.

On balance, economic activity in the Sixth District remained weak from mid-May through June. Labor markets improved somewhat as businesses in parts of the region reopened. Nonlabor costs remained subdued. ... Manufacturing activity declined, and reports on new orders were mixed. ...

Employment and Wages

Labor conditions improved modestly since the previous report. Some firms reported slowly recalling workers and increasing hours as demand increased, while others remained in a holding pattern. Many of those bringing employees back indicated staffing was not back to pre-pandemic levels. While some employers reported taking measures to cut less productive processes and employees, others were able to acquire more skilled and productive staff due to greater talent availability. Although some remote workers returned to the office, many firms indicated success with remote arrangements and noted they will continue this stance for the near term and possibly beyond. Some employers remained committed to maintaining employment levels and plan to reduce hours, wages, and possibly benefits to maintain those levels; however, most indicated that demand will determine staffing levels in the second half of the year. As the support from the Paycheck Protection Program winds down, many employers indicated that they will be forced to lay off workers should business remain weak.

Contacts continued to report wage and salary cuts, except at the low-end of the pay scale and among essential workers. Reports on the disincentive to work from receiving unemployment insurance benefits were mixed.

Manufacturing

Manufacturing contacts indicated that overall business activity decelerated, but at a somewhat slower pace than the previous report. While most firms reported decreases in new orders and production levels, a modest rise in new orders was noted by a few contacts. Purchasing managers suggested that supplier delivery times were getting longer as some supply chain disruptions continued. Contacts also cited a decline in finished inventory levels. Expectations for future production levels declined, with only one-fifth of contacts expecting higher production levels over the next six months.

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

Economic activity in the Seventh District increased strongly in late May and June, but remained well below its pre-pandemic level. Contacts expected further growth in activity in the coming months, but most did not expect a full recovery until at least the second half of 2021. Employment, consumer spending, and manufacturing increased substantially, while business spending and construction and real estate activity increased modestly. Wages edged up, prices declined slightly, and financial conditions deteriorated modestly. ...

Employment increased substantially from a very low level over the reporting period, with gains spread widely across industries. Many contacts who received a Paycheck Protection Program (PPP) loan continued to indicate that the program was helping them avoid layoffs. A number of contacts said that their ability to retain workers after the PPP money ran out depended heavily on future demand. Manufacturers facing slowdowns reported further use of downtime to carry out maintenance or do productivity enhancing projects. Some auto dealers reported selling a large number of vehicles while employing far fewer workers. Several contacts again commented that generous unemployment benefits were making it difficult to bring payrolls back to desired levels. Wages edged up across skill levels. Benefits costs also ticked up.

Manufacturing production increased strongly in late May and June, but remained well below where it was before the pandemic began. Auto production increased very sharply from a very low level as both assemblers and suppliers reopened. However, some contacts in the industry were concerned that the rising number of COVID-19 cases in parts of the US could result in new plant shutdowns. Steel production increased moderately, led by increased demand from the auto and oil and gas industries. Demand for heavy machinery picked up, but remained weak. Orders from specialty metals manufacturers increased moderately on balance, with reports of steady demand from the defense sector and increases from the medical and food manufacturing sectors. Manufacturers of building materials reported a moderate increase in shipments.

Economic activity has rebounded sharply since late May; however, overall conditions remain significantly depressed and the pace of recovery appears to have slowed since mid-June. Contacts reported reopening and bringing back furloughed workers, but the pace has been uneven across firms and sectors. General retailers, auto dealers, and hospitality contacts report increases in business activity, while manufacturing contacts reported little change. ...

Employment and Wages

Employment continued to increase at a robust pace. However, the pace of recovery has slowed through the reporting period and the level of economic activity remains depressed. Businesses have begun to reopen and bring back furloughed workers, but recovery has been uneven across firms and sectors. Small businesses have been slow to recover; one staffing contact reported small firms were "decimated," estimating that 5% of their small clients had filed for bankruptcy and expecting up to 25% to do so by the end of the year. Businesses that support other businesses, such as wholesalers and intermediate-goods manufacturers, have also been slow to recall workers in the face of weak demand. Some firms reported difficulty hiring back low-wage workers, attributing it to continued health concerns and unemployment benefits. Other firms, especially larger ones, have increasingly laid off workers as they reassessed how long the recovery will take and whether they should downsize permanently.

Reports on wage growth have been mixed. Some firms have increased wages for low-wage workers to entice them to return to work and forgo unemployment benefits; however, other contacts reported reducing hazard pay. A payroll contact reported that half his clients who had previously cut wages had returned them to pre-March levels. Other firms have reported cutting nonwage benefits, such as matching 401K contributions, to control costs. One contact emphasized a systemic lack of "normal" raises and bonuses.

Manufacturing

Manufacturing activity is little changed since our previous report. Survey-based indices showed slight improvement in overall manufacturing activity in Arkansas and Missouri from May to June. New orders and production increased modestly in both states, the first signs of growth since February. Contacts in steel and printing industries reported no change to production because of limited demand; both are still producing at about two-thirds capacity. One contact reported extending planned shutdowns past the Fourth of July, resulting in the furloughing of some workers; another contact reported having recently laid off a few workers.

Nonfinancial Services

Activity in the services sector has improved since the previous report. Job vacancies decreased uniformly across the District in nonfinancial services firms by approximately 10 percent year-over-year. Staffing contacts reported that professional service sector positions have increased halfway to pre-pandemic levels and very few contractors have been laid-off in recent weeks. A hospital contact reported volumes for inpatient services has increased faster than anticipated. ...

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

Ninth District economic activity was mixed since the previous report, with declines in most sectors, despite some improvements due to emergency federal stimulus and gradual reopening of state economies in the District. Employment rose from very contracted levels, wage pressures were flat, and price pressures remained minimal. The District economy saw growth in consumer spending and tourism, but decline in services, construction and real estate, manufacturing, energy, and mining; agricultural conditions remained poor.

After a sharp contraction in previous months, Tenth District economic activity rebounded slightly in June. Expectations also improved, and contacts in most sectors anticipated higher levels of activity in the months ahead. ... Manufacturing activity expanded slightly, driven by gains at non-durable goods plants. .... Professional and high-tech services contacts continued to report lower sales, and additional declines were anticipated in the months ahead.  ... District employment started to recover, with the most significant gains in the retail, restaurant and tourism sectors. Despite recent improvement, employment still remained well below year-ago levels in several sectors. Wages rose modestly, and prices increased across most District sectors.

Employment and Wages

District employment started to recover in June after declining in the previous two survey periods. The most significant gains occurred in the retail, restaurant, and tourism sectors, with retail employment approaching year-ago levels. However, several industries reported employment levels that were still sharply below a year ago including transportation, tourism, restaurants and durable-goods manufacturing. Overall, employment was anticipated to increase slightly in the months ahead, but expectations were varied across industries.

Labor shortages were not an issue for the majority of respondents, but some contacts reported shortages for truck drivers, skilled technicians, and restaurant workers. Wages rose slightly, and modest gains were expected in the coming months.

Manufacturing and Other Business Activity

Manufacturing activity expanded slightly in June after steep decreases for three straight months. The increase in activity was driven by an uptick at non-durable goods factories, including sharply higher production at food and beverage manufacturing plants. Activity at durable goods factories, especially for primary and fabricated metals, continued to decline, but at a slower pace than in previous months. Production and new orders increased slightly but remained well below year-ago levels. Over 75 percent of factory contacts reported applying for the SBA PPP program, and most indicated that those loans prevented some layoffs and furloughs. Expectations for future activity increased, though capital expenditures plans and expectations for new orders for export remained subdued.

Outside of manufacturing ... Sales dipped further at professional and high-tech services firms, and were below levels a year ago. Contacts in the transportation and professional and high-tech services sectors anticipated fewer sales and capital expenditures in the months ahead. By contrast, expectations among wholesale trade contracts rebounded, with contacts expecting significantly higher sales moving forward.

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

The Eleventh District economy regained its footing following unprecedented declines in the previous two reporting periods. Activity in the manufacturing and service sectors began rebounding, as did retail spending. However, the level of output and demand remained below pre-COVID levels. ... Employment stabilized, according to contacts, but overall labor market conditions remained weak. Wages were flat to slightly up. ... Outlooks improved, but a weak economy, depressed activity in the energy sector, the resurgence of COVID-19 infections, and a pause in the reopening of the district economy were causing concern among contacts.

Employment and Wages

Most contacts reported holding employment steady. Manufacturing and service sector employment was flat, with scattered reports of hiring, while energy contracted. Forty-three percent of respondents to a June Dallas Fed survey of 400 Texas manufacturing and services firms indicated reduced employment levels due to COVID-19 and, among this group, 26 percent said it would take more than a year to get back to pre-COVID headcounts and 19 percent said they do not ever expect employment to get back to pre-COVID levels. Also, many contacts cited challenges in bringing workers back given rising infection rates, quarantined employees, and confirmed positive COVID-19 cases among staff.

Wages were flat to slightly up; however, airlines and energy firms among others noted pay cuts and/or freezes. Companies looking to hire along with staffing firms noted difficulty recruiting due to lack of applicants and/or high unemployment insurance benefits.

Manufacturing

Nonfinancial Services

Service sector activity rose modestly in June, following a period of declining demand from March through May. Performance was mixed across industries, with those experiencing sluggish activity citing weakness in the oil and gas sector, continued operational restrictions, and weak demand. Health care firms saw a strong pickup in demand. Some professional and technical services firms said they were benefitting from strength in the residential real estate market. Activity in the leisure and hospitality sector rebounded but remained well below last year's levels. ... Demand for staffing services was flat to down during the reporting period. Outlooks were mixed and generally uncertain due to the resurgence of COVID-19, and concern about future consumer demand trends.

Economic activity in the Twelfth District contracted modestly on balance during the reporting period of mid-May through June. Employment levels increased slightly, as rehiring activity proceeded cautiously. Wages were generally stable, as were prices. Sales of retail goods rose moderately, while activity for providers of consumer and business services continued to contract sharply. Manufacturing activity was mixed, and conditions in the agriculture sector remained weak. ...

Employment and Wages

Employment levels increased slightly, as reopening and rehiring activity proceeded cautiously after the prior months' surge in layoffs and furloughs. Most companies that reduced employment in the wake of the COVID-19 outbreak added only a fraction of previously separated workers to their payrolls, while others that did not lay off or furlough workers scaled back hiring plans going forward. IT and business services companies noted continued hiring, albeit at a slightly slower pace. Building material producers reported a tick up in payrolls in response to growing demand from the construction sector. In Los Angeles, restaurants increased employment modestly, but anticipated having to reinstate furloughs due to a reversal in the reopening process. ... Some contacts reported generous unemployment compensation limited the pace of hiring.

Wages were broadly stable. While contacts noted modestly to moderately falling wages for some lower-skilled jobs and rising salaries for in-demand jobs in IT and finance, most reported stable compensation. A few contacts cited firms' tendency to try to ride out the initial shock of a downturn before adjusting wages and other business costs. However, some firms have suspended or postponed bonuses and merit increases in response to deteriorating business conditions.

Manufacturing

Manufacturing activity was mixed but remained tepid in general. Where demand warranted firms' returning to full capacity, their ability to do so depended largely on how readily they could adapt to social-distancing regulations, a factor that varied significantly from business to business. A steel producer in Oregon reported that funds from the Paycheck Protection Program helped them stay afloat over the reporting period but that work orders were still a fraction of their pre-COVID-19 level. On the other hand, a building product manufacturer saw an encouraging increase in production and sales but attributed some of the jump to making up for April's very weak activity rather than improved market conditions. Elsewhere, a renewable energy equipment manufacturer noted a modest rebound in capacity utilization as supply chains passing through China and Mexico reopened. Spotty availability of input materials generally posed an additional challenge for some manufacturers attempting to move toward more normal operations.

© 2019, Bruce Steinberg.  All rights reserved.

last updated July 15, 2020