OKLAHOMA CITY – The Kansas City Federal Reserve Bank’s latest monthly survey of services activity produced mixed results.
Services activity in the Tenth District, which includes Oklahoma, decreased moderately in September but expectations for future activity rose, according to Chad Wilkerson, economist at the Federal Reserve Bank of Kansas City.
“Regional services activity slowed somewhat in September and was still below year-ago levels for the majority of firms,” said Wilkerson, vice president and Oklahoma City Branch executive at the Federal Reserve. “On the other hand, more contacts than in past surveys expected activity to increase over the next six months.”
The Kansas City Fed’s monthly Survey of Tenth District Services provides information about several indicators of activity, including sales, revenue, employment and capital spending, while identifying changes in prices of input materials and selling prices.
Survey participants represent a variety of industries, including retail and wholesale trade, automobile dealers, transportation, information, high-tech and professional services, real estate, education, restaurants, health services, tourism and other services firms.
The Kansas City bank serves the Tenth Federal Reserve District, which encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. As part of the nation’s central bank, the KC bank participates in set- ting national monetary policy, supervising and regulating numerous commercial banks and bank holding companies, and providing financial services to depository institutions.
SPECIAL QUESTIONS
Contacts this month were asked special questions about wages for workers who were furloughed and then rehired, in addition to questions about expected wage growth and business plans.
Most businesses that furloughed workers reported that wages for rehired/returned employees were the same as before workers were furloughed, and several firms increased wages for returning employees. Overall, 64% of contacts indicated they did not furlough workers.
Firms expected wage and salary growth in the year ahead to slow somewhat; 35% of firms expected wage and salary growth to be lower than in the previous year, while 23% said it would be higher. Looking forward, 58% of firms expected to identify and hire new employees over the next six months.
Nearly half of contacts planned to increase marketing or sales, and 27% of businesses expected to develop online sales or websites moving forward. Additionally, 25% of firms reported they will need to learn how to better provide for the safety of customers and employees in the next six months.
SELECTED COMMENTS
“At this time gross profit is up 10% over last year. Our system of profit sharing will increase the bonus for all employees.”
“Prices are rising sharply on residential real estate because of three factors: pent-up demand from the lockdown, very low interest rates, and shortage of materials because of national demand. We expect this is go back to normal in the next 60 days.”
“We raised wages in order to keep good employees.”
“The furlough was short-lived, only six weeks.”
“It’s tough out there; we had a great Jan/Feb, hit the skids in March and are not back to pre-COVID revenues. PPP [Paycheck Protection Program] helped but we need a wide-open economy with obvious safety precautions.”
“Business in the Great Plains has rebounded pretty well.” However, “We believe that additional stimulus money is needed in the very near future.”
“The PPP was very helpful to us. We would have cut much deeper had we not had it.”
“This is the best year we have ever had... a lot of pent up demand.”
“The concern is what happens after the leisure traveler starts to fall away; will the corporate traveler come back?”
“Sales shifts and the times people shop and the amount they buy have changed, and much of this change we believe to be with us after the ‘new normal’ returns.”
“I’m hopeful that our business market will return to normal early 2021. We are in a wait-and-see posture.”