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.
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.”
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 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 Federal Reserve. 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.”
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