Citizens Business Conditions Index™ Drops in Q1
30 April 2024 - 11:01PM
Business Wire
Economic momentum cools as rates remain
elevated
The national Citizens Business Conditions Index™ (CBCI) fell to
48.2 to start the year as business activity normalized from
elevated levels in recent quarters. The reading below 50 indicates
that economic momentum slowed during the first quarter against a
backdrop of moderately restrictive monetary policy.
Labor markets and consumer trends remained resilient in the
first quarter. However, Citizens’ proprietary data showed softening
revenue trends during the period after solid performance across
most industries in the second half of 2023. New business
applications also fell compared to the fourth quarter, though they
remain well above pre-pandemic levels.
“While the Index shows business conditions dipping in the first
quarter, the overall U.S. economy remains fairly healthy,” said
Eric Merlis, managing director and co-head of global markets at
Citizens.
The underlying components of the index reflected mixed dynamics
in the business environment. One of the five components provided a
boost to the Index, while one was neutral and three weighed on the
reading.
- The ISM non-manufacturing component was expansionary as demand
for services continued to be strong, boosting the Index.
- Employment trends, as measured by initial jobless claims,
remained resilient and were neutral to the Index.
- New business applications declined, weighing on the Index, but
remain elevated relative to pre-pandemic levels.
- The activity data of Citizens’ Commercial Banking clients also
showed softening revenue trends after a strong fourth quarter.
- The ISM manufacturing component was contractionary for the
sixth consecutive quarter. However, monthly data indicates some
green shoots in the manufacturing outlook. The Index component
turned positive in March for the first time since September
2022.
Overall, the first quarter CBCI reveals a business environment
that is feeling the effects of a sustained period of higher
rates.
“The first quarter index reading shows a business environment
that is slowing as higher interest rates weigh on economic
conditions,” said Merlis. “While concerns about inflation persist,
the data provides evidence that tighter monetary policy is having
its intended effect.”
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Inc. Citizens Financial Group, Inc. is one of the
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version on businesswire.com: https://www.businesswire.com/news/home/20240430580175/en/
Frank Quaratiello 617.543.5810
frank.quaratiello@citizensbank.com
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