Citizens Business Conditions Index™ Bounces Back in Q1

Rhea-AI Summary

Citizens Financial Group reported a rise in its Citizens Business Conditions Index™ (CBCI) to 53.9 in Q1 2023, demonstrating resilience in the economy despite potential recession risks. The labor market remains strong, and revenue growth was noted across various sectors, particularly in Consumer Services and Healthcare.

New business applications increased, enhancing the Index, while employment trends remained stable. However, the manufacturing sector showed signs of slowing down due to higher borrowing costs. The report indicates a recovery in business conditions as inflationary pressures ease, suggesting a resilient business environment that continues to adapt to ongoing interest rate hikes.

Positive

• CBCI rose to 53.9, indicating positive business conditions.
• Revenue growth across sectors, particularly in Consumer Services and Healthcare.
• Increase in new business applications.
• Employment trends remained stable, despite layoff announcements.

Negative

• Manufacturing sector showed slowing growth due to higher borrowing costs.

Respondents seeing revenue increases broadly despite possible recession risk

PROVIDENCE, R.I.--(BUSINESS WIRE)-- Citizens announced today that its national Citizens Business Conditions Index™ (CBCI) rose to 53.9 in the first quarter, reflecting continued strength in the labor market, more new business openings and positive corporate revenue trends. The Index had dipped below 50 during the fourth quarter of last year and the bounce-back during the first quarter signaled a return to positive business conditions.

The labor market has remained resilient despite aggressive Federal Reserve rate hikes aimed at slowing the economy to curb inflation. Citizens’ proprietary data on client revenue grew across industries during the first quarter with Consumer Services and Healthcare among the top sectors due to their ability to pass on rising costs to customers. The manufacturing sector slowed as higher borrowing costs impacted expansion by limiting capital expenditures.

“The U.S. economy bounced back during the first quarter and, despite the disruption in the financial sector, there are several positive signs going forward such as improving inflation measures and still-strong labor numbers,” said Eric Merlis, managing director and co-head of global markets, Citizens. “Policy-makers are still trying to thread the needle amid heightened recession concern, but companies that have made it through the pandemic and recent headwinds continue to prove their resiliency.”

Relief from Inflation Surprises

The underlying components of the Index showed improving dynamics in the business environment. Three of five components boosted the Index level while one was neutral and one weighed on the reading.

• The proprietary activity data of Citizens’ commercial banking clients, a key component of the Index, was very strong across regions, suggesting that the conditions at middle-market and mid-corporate businesses remained positive.

• The ISM non-manufacturing component grew as consumers spent more on services and companies in these sectors were more able to pass on any increased costs.

• New business applications increased, helping to boost the Index.

• Employment trends, which are measured by initial jobless claims as an Index component, were flat for the quarter, but nationally the number of jobs gained overall was surprisingly high despite much-publicized corporate layoff announcements.

• The ISM manufacturing index decreased as the sector is more sensitive to rising interest rates.

The mix of trends captures a quarter where demand for goods was lower while demand for services was steady amid broader employment stability.

The first-quarter CBCI revealed a business environment that continues to adapt to the year-long rate hike campaign from the Fed. The strong labor market continues to have a stabilizing effect as business conditions search for a new post-tightening normal.

“The first-quarter CBCI showed a business environment where activity has adjusted as interest-rate hikes seem to be working to curb inflation,” said Merlis. “The still-strong job market continued to be a source of support during the quarter.”

Citizens is a trusted strategic and financial adviser, consistently delivering clear and objective advice. The Citizens approach puts clients first by offering great ideas combined with thorough market knowledge and excellent execution, to help our clients enhance their business and reach their potential. For more information, please visit the Citizens website.

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $222.3 billion in assets as of March 31, 2023. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a full-service customer contact center and the convenience of approximately 3,400 ATMs and more than 1,100 branches in 14 states and the District of Columbia. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers a broad complement of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange, interest rate and commodity risk management solutions, as well as loan syndication, corporate finance, merger and acquisition, and debt and equity capital markets capabilities. More information is available at www.citizensbank.com or visit us on Twitter, LinkedIn or Facebook.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005243/en/

Frank Quaratiello

617.543.5810

frank.quaratiello@citizensbank.com

Source: Citizens Financial Group, Inc.

FAQ

What is the Citizens Business Conditions Index for Q1 2023?

The Citizens Business Conditions Index (CBCI) rose to 53.9 in Q1 2023.

How did the labor market perform in the first quarter of 2023?

The labor market remained resilient with stable employment trends and significant job gains.

What sectors saw revenue growth for Citizens in Q1 2023?

Revenue growth was notable in the Consumer Services and Healthcare sectors.

What was the impact of Federal Reserve rate hikes on the manufacturing sector?

The manufacturing sector experienced slowing growth due to the impact of higher borrowing costs.

What does a CBCI above 50 indicate?

A CBCI above 50 indicates positive business conditions.