Beige Book: N.E. businesses continue to have ‘considerable uncertainty’ on economy

ECONOMIC ACTIVITY in the New England region was said to have improved in recent months, but remained well below activity from one year prior, according to the most recent Beige Book report from the Federal Reserve.

PROVIDENCE – Economic activity in New England picked up somewhat in the second half of May and all of June, the Federal Reserve’s Beige Book report said Wednesday.

The report, a survey of businesses in the region, said economic activity in the region remained well below what it was a year earlier. Respondents offered varied experiences in the recent months, some having called workers back early, others laying employees off, and others reporting net hiring.

The report also highlighted that most respondents’ outlooks could be described as continuing to have “considerable uncertainty,” similar to responses in May. 

Prices in the region were said to have remained level.

- Advertisement -

Employment changes in the region for the period varied by industry, the report said. It noted that an aerospace manufacturer had laid off 7% of its workforce and a toy maker had furloughed salespeople and complained that production workers had not returned due to generous unemployment insurance benefits. Another retailer reported calling back corporate staff on July 1, with plans to bring back roughly 1,800 furloughed warehouse workers and store employees.

Retail respondents continued to report major disruptions in the region due to COVID-19 but said that sales had improved since April.

Tourism sector respondents said that bookings in the region had increased in the past few months. One respondent, in a coastal area, said that bookings have returned to 2019 levels for July and August. The report also said that restaurants in coastal areas continue to cite difficulties in adjusting to social-distancing guidelines.

Manufacturers in the region reported varying sales trends. A toy manufacturer in the region said that sales had slowed in part due to the stoppage of movie productions, which impacted media tie-in sales, as well as production difficulties. Most manufacturing respondents said they expected business to improve over the rest of the year. Other manufacturers reported an increase in sales, with one manufacturer and retailer of furniture saying it had hired back of most of its employees after receiving a Paycheck Protection Program loan.

Commercial real estate in the region was said to remain on pause due to the pandemic. Most respondents reported an increase in sublease activity in the office-leasing market, with most tenants able to pay rent in May and June. Some retail tenants, which were hit hardest by the pandemic, did fail to pay rent in some cases. Investment sales in the sector were said to be slow to nonexistent, with respondents expressing substantial concern over uncertainty.

The Providence commercial market was said to have picked up slightly in recent weeks, but most deals were time sensitive, the report said.

The Providence industrial-leasing market, which was described as “historically quiet” was said to be worsened by the pandemic, with respondents expecting that availability in the area would rise significantly in the near future.

The residential real estate market in the region was said to have seen a substantial inventory drop and an increase in median prices in all but the Vermont market and the Boston condominium market. The market was said to currently favor sellers.

Information technology firms in the region were said to remain stable through the first quarter; however, optimism was mixed regarding the economy in the sector.

No posts to display