Business activity decreased significantly in March

Tenth District services decreased significantly in March to the lowest level in survey history (since 2014), and firms expected business activity to drop further in the future (Chart 1 & Table 1). The input price index expanded at a slower pace and the selling price index declined compared with a month ago. Expectations for future input prices remained positive, while firms anticipated lower selling prices in six months.

The month-over-month services composite index was -16 in March, the lowest posting since the survey started in 2014, and down significantly from 6 in February and 14 in January (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Nearly all month-over-month indexes turned negative. The index for wages and benefits remained slightly positive, but was still the lowest level in survey history. The decrease in general revenue/sales index was broad across business sectors, driven especially by a steep decline in consumer spending activity. Most year-over-year services indexes also dropped into negative territory, and the year-over-year composite index fell from 20 to -4. Expectations for future services activity decreased sharply, and the expected composite index posted the worst change from a month ago in survey history, dropping from 23 to -30.

Composite Index vs. a Month Ago

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Date Composite
Mar-19 1
Apr-19 10
May-19 14
Jun-19 5
Jul-19 2
Aug-19 18
Sep-19 13
Oct-19 -4
Nov-19 9
Dec-19 15
Jan-20 14
Feb-20 6
Mar-20 -16

Special questions

This month contacts were asked special questions about the effects of Coronavirus (COVID-19) and recent market volatility. Nearly 82 percent of businesses reported decreased outlooks for business activity and over 75 percent reported a lower demand outlook for products or services due to the coronavirus outbreak and recent market volatility (Chart 2). Around 43 percent indicated increased/slower delivery times. Over 54 percent of firms either reported lower levels of employment or expected employment levels to decline, and more than 57 percent reported their outlook for capital expenditures for 2020 had declined or spending plans had been put on hold. Nearly 39 percent of contacts faced delayed payments from customers and 63 percent had concerns about cash availability (Chart 3). In response to coronavirus, 94 percent of firms reported instituting protective measures at their facilities (e.g. hand sanitizer, etc.), approximately 74 percent of firms had restricted business travel, and 25 percent indicated they had altered healthcare policies due to the coronavirus outbreak.

Selected Services comments

"Currently closed to public, thus no business, which is tolerable in the short-term, but would be problematic long-term."

"With customers staying at home we have no sales. This may force us to shut down temporarily."

"We need access to cash fast… business has dropped 95% in the last 4 days."

"(Business activity) has dropped to basically zero. Until schools reopen we are going to greatly suffer. We have tremendous uncertainty - how long will this last - 1 month - 2 months - 6 months - it will bankrupt us eventually if it is prolonged."

"We will need real information and guidance on how long this will last. One month is one thing - until August… well that is a death sentence for us."

"If small business does not get rent and real estate tax relief we will all go out of business."

"Hourly employees are worried about pay continuing… planning to retain full time employees if sales hold."

"Many employees will be laid off or not able to go to work."

"Loss of effective supply chain responsiveness especially on critical chemicals… Many of the cleaning chemicals have been bought by the public."

"Significantly below breakeven revenues… government shutdown of restaurants and bars affects all of tourism."

"If we can get enough cash to make it through the next six weeks we will be in great shape. I don't have enough cash to pay people who aren't working because of quarantine, sick, or fear. I need certainty about how to handle them. I don't want to lose them, but I also don't want them working."

"We are struggling to keep our stores staffed as parents stay home with children or we ask workers who have been exposed to the virus to say home."

Survey Data

PDFCurrent Release

Excel SpreadsheetHistorical Monthly Data

About the Services Survey


Chad Wilkerson

Senior Vice President and Oklahoma City Branch Executive

Chad Wilkerson serves as Oklahoma City Branch Executive and Senior Vice President for the Federal Reserve Bank of Kansas City. Wilkerson began his career with Federal Reserve in …