Almost a quarter of companies surveyed by the Federal Reserve Bank of Philadelphia temporarily shut down because of the coronavirus in the week ending March 29, the Philly Fed said Thursday in its first weekly survey of how businesses in the Third District are responding to the pandemic.
That compared with just 15 percent of all firms surveyed in the previous week, the Philly Fed said, on the same day that the US Labor Department reported new jobless claims surged by a record 6.6 million last week in response to widespread government-mandated shutdowns of non-essential businesses.
The new Fed survey of 181 firms found that about 46 percent reported decreases of more than 5 percent in new orders or sales in the latest week compared with their expectations before the pandemic hit. Amid widespread reports of mass layoffs in the retail and hospitality industries, non-manufacturers reported bigger declines than manufacturing companies.
“The Federal Reserve Bank of Philadelphia and Reserve Banks around the country continue to monitor the economy to better understand the scope of the economic damage COVID-19 is causing,” the Philly Fed said in a statement. “To that end, the Philadelphia Fed is continuing with regular monthly surveys and outreach. However, given the speed with which the economy is changing, the Bank has launched a weekly survey of businesses in the Third District to increase the timeliness of data focused on COVID-19 impacts on aspects of firm demand, production, and employment.”
Ten percent of non-manufacturers reported a decline of 60 percent or more in sales or orders, the report said. Not all firms answered all questions. About three-quarters of responding firms provided paid sick or family leave for their staff during the crisis. Asked how they responded to the coronavirus and associated effects like falling stock and oil prices, and mandated closings, about three-quarters said they had shifted to telecommuting and working from home, while 50 percent said they had ceased all hiring.
More than a fifth reduced employee hours or furloughed staff with the expectation of recall, but more than 10 percent laid employees off with no expectation of recall.
Fifty-three percent of companies said they were providing benefits only to furloughed employees, while 51 percent said they were not providing pay. More than 20 percent said they were not providing compensation of any kind.
In the previous week, more than 30 percent of firms said that mandated closures were the major reason for declining sales and orders, and more than 20 percent said a “demand shock” was the biggest reason for their reported declines in sales or orders.
The survey is in addition to the Philly Fed’s regular monthly surveys of manufacturing and non-manufacturing businesses in its district.
Other Federal Reserve assessments of the pandemic’s effects have included one from the San Francisco Fed which said on March 30 that the virus had “severely disrupted economic activity.”