It no doubt comes as no surprise that manufacturing in Oklahoma and other states that make up the Tenth District of the Federal Reserve Bank of Kansas City dropped in the past month. But what is a surprise is that the April Manufacturing Survey found results at their lowest level in 26 years.
““If the situation doesn’t improve in the next 4-6 weeks we will be instituting large scale layoffs,” responded one manufacturer.
Results were released Thursday and Chad Wilkerson, vice president and economist at the bank said they were the lowest reading in survey history since 1994 while expectations for future activity improved but remained slightly negative.
“Regional factory activity continued to decline in April, with our composite index falling to the lowest level in survey history as firms continued to be negatively impacted by COVID-19,” said
Wilkerson. “Many firms also reported employment changes in response to coronavirus.”
But manufacturers admit they are facing very difficult times.
“We have furloughed around 17% of our workforce, while maintaining their benefits,” said one. ” Business is off considerably and bookings are way down… the instability and low price of oil is also going to have a devastating impact on business.”
The survey was of manufacturing firms in Oklahoma, Kansas, Colorado, Nebraska and Wyoming and the northern half of New Mexico and the western third of Missouri.
Monthover-month price indexes declined again in April, but District firms expected prices to rise slightly in the next
six months.
“We have not lowered wages; however, overtime has been eliminated. Employment has been maintained where necessary and layoffs based on productivity. Revenues are diminished considerably due to the price of oil on top of COVID-19,” answered one manufacturer.
Factory activity dropped to new levels in April as the month-over-month composite index was -30, the lowest composite reading in survey history, and down considerably from -17 in March and 5 in February. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes.
The decrease in district manufacturing activity was steepest at durable goods factories such as primary and fabricated metals,
and activity at non-durable goods plants including food and beverage manufacturing declined as well. All month-over-month indexes dropped further in April except for supplier delivery time which continued to increase.
Source: Federal Reserve Bank of Kansas City