Industries Affected by Coronavirus (COVID-19)
As the situation surrounding Coronavirus (COVID-19) continues to develop, industries are experiencing the impacts in various ways. As the leading provider of Industry Intelligence for those advising small- and medium-sized businesses, our research team is working to provide updates on industries affected by COVID-19. Information will be added and updated regularly, so continue to check back for the most recent insights.
How The Economy Is Affected
Total nonfarm payroll employment fell by 701,000 in March, causing the unemployment rate to rise 0.9% to 4.4%. This is the largest over-the-month increase in the unemployment rate since January 1975. The data reflects changes in unemployment during the first half of the month and predates many business closings and layoffs due to the coronavirus. Employment in leisure and hospitality fell by 459,000, while employment in healthcare and social assistance fell 61,000 in March. Other industry sectors experiencing employment declines were business and professional services (52,000), retail trade (46,000), construction (29,000), other services (24,000), manufacturing (18,000) and mining (6,000). The Federal government added 18,000 jobs in March, mostly due to hiring for the 2020 Census.
Initial unemployment insurance claims were 6,648,000 for the week ending March 28, an increase of over 3.3 million from the previous week’s record level. The past two weeks have seen the highest level of initial claims in the history of the seasonally adjusted series, far surpassing the previous high of 695,000 claims in October 1982. State comments indicated a wider impact beyond accommodation and food services and general service industries. Many states continued to cite the health care and social assistance, and manufacturing industries, while an increasing number of states identified the retail and wholesale trade and construction industries.
Read More: https://www.dol.gov/ui/data.pdf
How Broad Sectors Are Affected
March 19, 2020 – Some segments of the management and administrative services sector are benefiting and others are hurting significantly by the fallout from coronavirus.
The most hurt are travel agencies, tour operators, and convention and trade show organizers. These firms have witnessed a rapid and severe decline in travel and gatherings, as businesses and consumers attempt to avoid close contact and closed in spaces like convention centers and airplanes. Businesses and organizations are canceling and postponing events and consumers are canceling vacations. International travel has largely ceased, due in part to fears of challenges trying to re-enter the US. Travel agencies are fielding calls and emails of customers demanding refunds, which are resulting in lost revenue. There could be an extended period of time after the coronavirus subsides before businesses and consumers are comfortable enough to resume travel.
Segments in high demand include facility support services and janitorial firms which are at the front lines of cleaning and sanitizing buildings to prevent the spread of coronavirus. Temp services are also trying to place workers to fill gaps left by sick or self-quarantining workers.
Segments that will see increased demand as the epidemic subsides are collections agencies and repossession services. Businesses and individuals who lost income due to shutdowns during the height of the epidemic may struggle to make payments on utilities, loans, credit and medical bills. Duct cleaning companies may also see an uptick in demand as consumers and businesses look to sanitize their air handling systems.
Segments less affected include landscaping services, security firms, and pest control services. Landscaping firms could see fewer new projects if construction development slows or property owners decide to postpone investing in large outdoor renovations. Waste management services will see a shift in garbage volume from commercial to residential as people work from home, shelter in place and avoid public places like restaurants.
March 18, 2020 – Coronavirus impacts the agriculture sector largely in demand for food, food exports, biofuels, and farm labor. The industry is challenged by school and restaurant closures and limitations on food service (drive-up or delivery). However, the industry has benefited from runs on grocery store shelves as consumers stockpiled food in preparation for quarantines.
Fears of job losses and payroll cuts may lead consumers to cut back on purchases of more expensive meats like beef, lowering its demand. Cattle prices declined 19% in early 2020, and share values for major producers like Tyson Foods and JBS were down by 32-36%. Prices for corn and wheat have also declined with lower international demand linked to the virus. However, livestock producers are benefiting from lower feed prices that reduce operating costs.
Agricultural producers are expected to see disruptions in exports to China. The US and China signed a trade agreement in January 2020, but China may not be able to meet its commitments, due to the coronavirus outbreak and economic pressures. Starting March 2, Chinese importers of US agricultural products could apply for exemptions to the nation’s tariffs on US goods, which makes US products more affordable. Exports to other countries are also being impacted by the virus. Perishable foods could spoil at the port or on ships, due to transport delays spurred by lack of labor at ports.
Producers of biofuel crops may be hurt by failed negotiation between Saudi Arabia and Russia regarding oil production volume and prices. If the global market is flooded with cheap oil, biofuel becomes a more expensive source of energy and demand declines. On the other hand, lower prices for gas and diesel fuel benefit crop producers as they power-up farm machinery and begin planting spring crops.
The agriculture sector has struggled with shortages of farm labor for years, but quarantines and closed borders may exacerbate the problem and further pressure farmers looking to plant spring crops and bring livestock to market. Another risk is the impact of the virus on senior farmers. The average age of farmers in the US is over 65 years, which puts many at higher risk of suffering severe effects, if the virus is contracted. The fact that agricultural operations are largely rural does somewhat insulates farmers from contracting the virus.
March 17, 2020 – The construction sector has been less affected in the short-term as existing projects progress, potentially at a slower pace due to difficulties in some areas to secure materials as well as city-wide quarantines of workers. The sector is expected to see a slowdown in new projects as businesses assess the coronavirus impact on their revenue and their ability to invest in capital projects.
The Federal Reserve has lowered interest rates in efforts to spur investmen