One of the first Federal Reserve reports to measure the U.S. economy since the coronavirus pandemic began is pointing to a grim future. The Philadelphia Federal Reserve’s March Nonmanufacturing Business Outlook Survey showed steep declines Tuesday (March 24) in most data points, with three of them hitting all-time lows.
“Nonmanufacturing firms reported a significant weakening in regional nonmanufacturing activity this month,” researchers wrote, noting that the survey’s indexes for general activity, new orders and more “all fell sharply and into negative territory this month, coinciding with developments related to the coronavirus.”
The Philly Fed conducted the poll among businesses in Delaware, Eastern Pennsylvania and Southern New Jersey between March 5 and 19 — right when the coronavirus scare was beginning to slam the U.S. economy. Researchers surveyed companies that are not in manufacturing, such as those in business and professional services, about current conditions and expectations for the coming six months.
The survey’s headline Index of Current Activity at the Firm Level fell from a 36.1 reading in February all the way down to a minus 12.8 for March. Some 35 percent of respondents reported decreased business activity in March, up sharply from 16 in February, the survey found.
The study’s New Orders component also dropped 45 points to a record-low minus 16.4. About 33 percent of firms reported fewer new orders vs. 17 percent who actually saw gains.
Companies’ outlook for the coming six months didn’t look much better, with two measures hitting record lows. For example, the study’s Diffusion Index for Future Activity at the Firm Level fell from 44.2 in February all the way down to minus 16.3 in March.
“Responses to this month’s Nonmanufacturing Business Outlook Survey suggest a notable weakening in nonmanufacturing activity in the region,” Philly Fed researchers wrote. “Future activity indexes fell to historical lows and suggest that respondents expect continued declines over the next six months.”