Fifth District Businesses Report on Hurricane Impacts

In October, we conducted a survey to gauge the effects of Hurricanes Harvey and Irma on Fifth District businesses. The survey included firms from the manufacturing, services, and retail sectors that are located throughout the Fifth Federal Reserve District.

For the most part, the effect of Hurricanes Harvey and Irma on Fifth District firms was indirect, and our survey results indicate that most firms in the Fifth District were not affected by the storms. On the other hand, the survey shows that hurricanes can affect areas of the country well beyond where they hit directly, and we (along with other Reserve Banks) will continue to try to better understand the impact of any event on regional businesses.

Of the firms that we surveyed, there were 158 respondents: 76 were manufacturers, 68 were non-retail service-providing firms, and 14 were retail businesses. The results from the survey indicated that 66.5 percent of the firms surveyed were not affected by either of the storms. Most of the reported impacts were negative, although there were businesses that reported positive economic impacts to their business and customers.

Out of the 53 participants who reported any impact from the hurricanes, 11 were only affected by Hurricane Irma, 13 were only affected by Hurricane Harvey, and 29 respondents reported being affected by both storms. The chart below illustrates the industry distribution of respondents who reported an impact from the storms. (Note: The number of participants reporting impacts from both storms was added to the response counts of each individual storm.)

Overall, more manufacturing firms were affected by the hurricanes. Of the 42 respondents who were affected by Hurricane Harvey, 66.7 percent were in manufacturing, a share disproportionately larger than the manufacturing share of total respondents, which was 48.1 percent. Additionally, of the 40 respondents who reported impacts from Hurricane Irma, 57.5 percent were in manufacturing. On the other hand, although only 8.1 percent of respondents were retailers, they made up a larger 11.9 percent of those affected by Harvey and 10 percent of those affected by Irma.

We asked the survey participants who were affected if the impact on their business was positive or negative. The results indicated that more businesses across the District experienced negative impacts from the hurricanes. From the chart below, 36 firms reported negative economic impacts from Hurricane Harvey, which, at 85.7 percent, was a much larger share than those who reported positive effects. The same was true of Hurricane Irma, where 78.95 percent of the 38 firms reported that the impact of the storms was negative.

Additionally, all sectors reported more negative than positive effects from the storms.  Of the 28 manufacturing respondents who were affected by Hurricane Harvey, 82.1 percent reported negative effects, and 77.3 percent reported negative effects from Hurricane Irma. In the service sector, 88.9 percent of service-providing firms reported negative effects from Hurricane Harvey, and 75 percent of the respondents reported negative effects from Hurricane Irma. Further, all of the retail firms that were surveyed reported negative effects (see chart below).

All of the states in our District had firms that reported some economic impact from either Hurricane Harvey or Hurricane Irma. The share of firms that reported effects from the storms was similar across states: The largest share was in South Carolina, where 47.8 percent of firms that responded to the survey reported being affected by the hurricanes; the smallest share was in the District of Columbia, where 28.2 percent of businesses that responded reported being affected by the hurricanes.

When asked to comment on how the hurricanes affected their businesses, most of the negative comments referred to supply chain disruptions and increased prices in raw materials such as gas, freight, lumber, and plastic resin.

One of the most common supply chain disruptions was the increase in freight costs due to tightness in the transportation industry. Particularly, businesses reported decreased availability of both trucks and drivers to move freight, and in some cases the shortage caused delayed shipments.

In addition, participants noted plant and mill closings, delayed supplier delivery times, lagged payments from affected customers, and decreased sales/revenues in affected locations.

On a positive note, a few respondents reported increased demand for their products in affected areas. Although some firms expected the disruption in supply chains and increased raw materials costs to continue for six months, most businesses anticipated that the impact would be short lived.

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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.