OKLAHOMA CITY – Services activity in the Federal Reserve’s Tenth District experienced a modest expansion in June after a sharp drop in previous months, but activity remained much lower than a year ago.
Expectations for future activity “recovered somewhat,” said Chad Wilkerson, vice president, economist and Oklahoma City branch executive of the Federal Reserve Bank of the Tenth District, which is located in Kansas City.
The Tenth Federal Reserve District covers Colorado, Kansas, Nebraska, Oklahoma and Wyoming, 43 counties in western Missouri, and 14 counties in northern New Mexico.
While part-time employment, inventory levels, access to credit, and capital expenditures indexes continued to decrease, general revenue and sales as well as wages and benefits increased, Wilkerson said. Monthly indexes for employment and employee hours inched up, too, he said.
“The uptick in the general revenue/sales index was driven by increased activity for retail, travel, tourism, transportation and restaurants.”
However, most year-over-year services indexes remained negative in June.
Of business owners/managers who were contacted by the Kansas City Federal Reserve, 76% applied for the Small Business Administration Paycheck Protection Program since March 13.
For firms that received an SBA loan, 87% reported that it prevented layoffs and/or furloughs. Also, 70% of SBA loan recipients surveyed indicated the loans prevented wage reductions, and 67% said it helped pay bills and/or rent.
More than two-thirds of firms reported the impact of coronavirus developments had decreased their firm’s revenues in 2020 compared to 2019, with an average decrease in revenues of 23%.
The survey monitors services firms selected according to geographic distribution, employment mix and size. Industries surveyed include retail and wholesale trade, transportation, high-tech and professional services, education, restaurants, motor vehicle dealers, information, real estate, health services, and tourism.
A sample of selected services comments collected during the latest survey included:
“Our sales and door traffic have increased these last two weeks. Consumer confidence seems to be increasing.”
“It is brutal. We don’t know if we will survive. PPP covers only five operating weeks, and we lost 12 weeks and we are hurting. We have drawn down fully on our line of credit basically taking a huge risk to pay rent. It is really hard and we need more cash.”
“All of our furloughed employees except for one have returned. Stimulus checks have certainly put money into customers’ hands and they are spending as of the moment.”
“The PPP worked extremely well for us... We were able to use a community bank and get our funds quickly, which helped give us the certainty we needed to not do massive layoffs. The business was down 25% in April, but it looks to be break-even with last year’s sales levels in June.”
“COVID plus oil prices are a huge drag on the business. Profitable first quarter wiped out in second quarter. Hoping for rebound in the third quarter.”
“Work from home will be a regular, although not exclusive, venue for many employees.”