Liberty Street Economics

« | Main | »

April 16, 2020

New York Fed Surveys: Business Activity in the Region Sees Historic Plunge in April

New York Fed Surveys: Business Activity in the Region Sees Historic Plunge in April

Indicators of regional business activity plunged to historic lows in early April, as efforts to slow the spread of the coronavirus kept many people at home and shut down large parts of the regional economy, according to the Federal Reserve Bank of New York’s two business surveys. The headline index for both surveys plummeted to nearly -80, well below any historical precedent including the depths of the Great Recession. About 60 percent of service firms and more than half of manufacturers reported at least a partial shutdown of their operations thus far. Layoffs were widespread, with half of all businesses surveyed reporting lower employment levels in early April.

Business Activity Tumbles

Business conditions were exceptionally weak in early April, according to respondents of our Business Leaders Survey, which covers service firms in the New York-Northern New Jersey region, and our Empire State Manufacturing survey, which covers manufacturing firms in New York State. As the chart below shows, the headline indexes in both surveys plummeted to nearly -80 this month. By way of comparison, the lowest level these indexes reached before this month was in the -40 to -50 range during the depths of the Great Recession.

Business activity declined for roughly 85 percent of firms, with firms in the leisure and hospitality, transportation, education and health, and retail sectors being hit the hardest. Interestingly, about 7 percent of firms saw an increase in activity, including several manufacturers. Firms in the information, finance, and wholesale trade sectors fared better than firms in other sectors. Overall, more than half of firms said that the availability of inputs had declined. Manufacturers saw broad-based declines in new orders and shipments, and longer delivery times. Service firms were nearly universal in viewing the business climate—a measure of the current state of activity, rather than the change in activity over the month–as worse than normal, with the business climate index plunging to an astonishing -94.

New York Fed Surveys: Business Activity in the Region Sees Historic Plunge in April

This month’s surveys also asked a number of questions about the impacts of the coronavirus pandemic, summarized in our Supplemental Survey Report. Results indicate that only 40 percent of service firms and fewer than half of manufacturers said they were operating at or near normal levels. Around 45 percent of service firms implemented a partial temporary shutdown, as did about 42 percent of manufacturers. When asked about their expected operating situation by the end of April, the proportions were about the same. Fortunately, only a handful of all firms had implemented a permanent shutdown, whether partial or total, and very few expect to do so by the end of April.

Ongoing Mass Layoffs

Job cuts among firms surveyed were extensive. More than half of all firms reported cuts to payroll staff as of early April. Among those firms that did cut staff, the average decrease was about 40 percent among service firms and 35 percent among manufacturers. Among leisure and hospitality firms, the incidence and size of job cuts were considerably larger. In terms of adjustments to work arrangements, 60 percent of workers in the service sector were working from home, on average—ranging from about a third in retail and construction to around 80 percent or more in the finance, information, and education sectors—as were about a quarter of workers at manufacturing firms.

Weathering the Storm

Businesses in the region have major concerns about their ability to weather the economic storm caused by the coronavirus pandemic. Among the most significant, nearly nine in ten firms are concerned about collecting payables from customers. Well over 80 percent of firms are concerned about maintaining adequate cash flow as the economy has weakened—up sharply from when we first asked this question just a few weeks ago. Understandably, there is also widespread concern among firms about taking on too much debt. About half of all firms are concerned about their ability to access credit and make loan payments. In addition, 55 percent of service firms and 40 percent of manufacturers are concerned about their ability to make rent payments. Roughly three in five firms in both the service and manufacturing sectors expressed concern about maintaining solvency.

Firms are dealing with the abrupt change in economic conditions in a number of ways. More than 50 percent of service firms are drawing down cash reserves, as are about 45 percent of manufacturers. Lesser, though still significant, proportions of firms in both surveys report dipping into personal funds to cover revenue shortfalls. In terms of taking on debt, a third of firms report making increased use of existing lines of credit, while about one in five report taking on a new loan. Of note, small businesses in our surveys expressed widespread interest in the SBA Paycheck Protection Program, though there was significant uncertainty among small businesses about securing a loan. A relatively small proportion of businesses—10 to 15 percent—obtained a temporary reprieve on a loan or rent payment to help deal with the financial toll of the coronavirus pandemic.

Looking ahead

Service firms tended to be pessimistic that conditions would be better six months from now, though manufacturers did expect to see some slight improvement, on net. Overall, the median firm expects the economic disruption caused by the coronavirus pandemic to last another 3 to 4 months. We will continue to monitor economic conditions in the region and provide timely updates as additional data and information become available. You can also visit our Community Resource Center on the coronavirus pandemic where individuals, businesses, and non-profits can find out what’s available to them at the federal, state, and local level.

Related Reading

New York Fed – Regional Economy resources page

Jaison R. Abel
Jaison R. Abel is an assistant vice president in the Federal Reserve Bank of New York’s Research and Statistics Group.

Jason Bram Jason Bram is a research officer in the Bank’s Research and Statistics Group.

Richard Deitz

Richard Deitz
is an assistant vice president in the Bank’s Research and Statistics Group.

How to cite this post:

Jaison R. Abel, Jason Bram, and Richard Deitz, “New York Fed Surveys: Business Activity in the Region Sees Historic Plunge in April,” Federal Reserve Bank of New York Liberty Street Economics, April 16, 2020,


The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

About the Blog

Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

Liberty Street Economics does not publish new posts during the blackout periods surrounding Federal Open Market Committee meetings.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.

Economic Research Tracker

Image of NYFED Economic Research Tracker Icon Liberty Street Economics is available on the iPhone® and iPad® and can be customized by economic research topic or economist.

Economic Inequality

image of inequality icons for the Economic Inequality: A Research Series

This ongoing Liberty Street Economics series analyzes disparities in economic and policy outcomes by race, gender, age, region, income, and other factors.

Most Read this Year

Comment Guidelines


We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:

Please be brief: Comments are limited to 1,500 characters.

Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.

Please be relevant: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post.

Please be respectful: We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will
not be posted.‎

Comments with links: Please do not include any links in your comment, even if you feel the links will contribute to the discussion. Comments with links will not be posted.

Send Us Feedback

Disclosure Policy

The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.