Beige Book: Outlook uncertain, pessimism about pace of recovery

Economic activity dropped sharply in most districts of the country, with a "highly uncertain" outlook and pessimism about recovery, according to the Federal Reserve’s Beige Book, released on Wednesday.

Although as reopening of the economy begins there is hope for improvement, the report showed widespread pain.

With nonessential businesses still mostly shut when the survey was conducted, consumer spending plunged, and the leisure and hospitality sector, hurt by minimal travel, saw steep declines.

Auto sales were significantly down from where they were a year ago, but several districts said things picked up lately. A "majority" of districts reported deep drops in manufacturing activity, with weak production levels.

Residential home sales plummeted, with fewer new listings as social distancing made it difficult to see homes for sale. Construction activity also dropped, as new projects were limited

While many respondents "expressed hope that overall activity would improve as businesses reopened, the outlook remained highly uncertain, as most contacts were pessimistic about the potential pace of recovery," the report said.

Richmond Fed surveys
Manufacturing continued to be weak in May in the district, according to the latest survey from the Federal Reserve Bank of Richmond, released Wednesday.

The composite index narrowed to negative 27 in May from negative 53 in April.

Reads of shipments, new orders and employment were all a little better than April's numbers, but still showed contraction.

The shipments index climbed to negative 26 in May from negative 70 in April, new orders improved to negative 35 from negative 61, while the number of employees was negative 16, an uptick from the negative 21 in April.

Expectations for shipments reversed to positive 10 in May from negative 7 in April, while new orders jumped to positive 12 from negative 14.

Service sector activity in the district was also sluggish in May, the Richmond Fed said.

The revenues index was at negative 48 in May, up from negative 87 in April, the demand index was at negative 40, an increase from negative 72 in April, while the employment index for May was negative 26, up from negative 34 it in April.

The expected revenues index narrowed to negative 12 from negative 50, while expected demand improved to negative 2 from negative 13.

Dallas Fed service survey
The downward spiral that defined the Texas service sector activity in March and April showed signs of slowing in May, according to business executives responding to the Federal Reserve Bank of Dallas' Texas Service Sector Outlook Survey.

The revenue index bounced back to negative 28.1 in May from negative 65.3 in April. The general business activity index improved to negative 41.7 from negative 83.9. The company outlook index was better to negative 30.2 from negative 71.8.

Looking six months into the future, the revenue index was positive 6.6, compared with negative 22.6 in April. The general business activity index was at negative 11.1 in May, compared to negative 34.3 in April, and the company outlook index was negative 5.9, an improvement from the negative 29.9 in April.

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