Coronavirus Fallout Spreads to Manufacturers in U.S. Heartland

(Bloomberg) -- More than 40% of manufacturers across a swath of America’s heartland reported negative effects from the coronavirus, adding to growing concerns about the economic impact of the disease globally, according to a survey released Thursday by the Federal Reserve Bank of Kansas City.

Additionally, more than half of the respondents expect negative effects from the virus for the rest of 2020 amid supply-chain disruptions. The outbreak has killed nearly 3,000 people around the world, depressing financial markets and threatening to damp global growth. The Kansas City Fed district includes Nebraska, Kansas, Oklahoma, Wyoming, Colorado and parts of Missouri and New Mexico.

Several manufacturers in the region noted supply-chain issues related to delayed Chinese shipments and the coronavirus, while others reiterated concerns about lingering fallout from Chinese tariffs and the grounding of Boeing Co.’s 737 Max.

One regional manufacturer said, “The longer the 737 Max situation continues and if coronavirus is not contained we are going to see negative supply and demand issues at our company.” Another said, “coronavirus has caused some supply chain disruption.”

Still, the outlook is not all bleak. More than 40% of firms expect positive effects from the trade deals signed this year.

The broader composite manufacturing index increased to 5 in February, indicating the first expansion since May, from minus 1 a month earlier. Measures of production, shipments and new orders strengthened this month. Bookings expanded for the first time since June.

--With assistance from Chris Middleton.

To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle

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