U.S. businesses saw an uptick in activity into the beginning of July as states eased restrictions to contain the novel coronavirus pandemic, a Federal Reserve report showed on Wednesday, but remained uncertain about the economic outlook amid a recent surge in cases in many parts of the country.
The mixed picture illustrated in the U.S. central bank's latest snapshot of firms' views mirrors wider economic data, from the unemployment rate to factory activity, which have improved since stay-at-home orders were eased in many parts of the country by the end of May, but could soon show signs of faltering.
"Economic activity increased in almost all Districts, but remained well below where it was prior to the COVID-19 pandemic," the Fed said in its report, referencing the respiratory disease caused by the virus. "Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications."
The Fed's survey, known as the "Beige Book," was conducted across its 12 districts from the end of May through July 6.
Economists expect U.S. economic growth contracted at its steepest pace in the second quarter since the Great Depression and original hopes of a swift economic bounceback have been dashed as the United States continues to struggle to contain the virus, almost five months after the first case was reported on U.S. soil.
The Fed's report showed that during the survey period a wide array of industries from leisure and hospitality to professional and business services picked up, but remained weak compared to year-ago levels.
In the Cleveland Fed's district, for example, many sectors indicated they were bringing idled workers back only slowly and were unlikely to rehire all of them in the near term.
Business contacts there also "remain concerned about the sustainability of the recovery if the spread of COVID-19 is not contained," the report said.
That scenario may already be in train. Fed officials on Tuesday warned of "thick fog" ahead for the economy as they continued to reset expectations on the pace of recovery amid fears that a broad second wave of cases could cause unemployment to rise again.
A resurgence in new infections, especially in the highly populated South, led by Texas and Florida, and the West, has prompted some authorities in these regions to either shut down businesses again or pause reopenings.
The Dallas Fed reported that while the district regained its economic footing "the resurgence of... infections and a pause in the reopening of the district economy were causing concerns."
Likewise the St. Louis Fed said economic activity had rebounded sharply but that the pace of recovery appeared to have slowed since mid-June with contacts "slightly more pessimistic."
The San Francisco Fed noted Los Angeles restaurant contacts were already expecting economic pain to deepen again.
They had "increased employment modestly but anticipated having to reinstate furloughs due to a reversal in the reopening process," the report said.
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