Citizens finds recovery continues in Q1

Increased vaccinations, fiscal package help nation overcome the shocks of COVID-19.
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Tony Bedikian credited positive vaccination trends for normalizing consumer activity. Courtesy Citizens

(As seen on WZZM TV 13) The Citizens Business Conditions Index for the first quarter of the year was in “upbeat territory,” the financial institution said.

Citizens — which is based in Providence, Rhode Island, and has branches in Michigan and 10 other states — published its Q1 2021 Citizens Business Conditions Index May 3. The bank said continued economic recovery from the shock of COVID-19 kept the first quarter’s national index in positive territory, with a healthy reading of 53.3. This compares with the fourth quarter reading of 56. A reading above 50 is considered expansionary.

Michigan had its best quarter since the national Citizens Business Conditions Index was measured in 2014, which Citizens described as good news on the economic recovery front. The Michigan index was at 58.26 for Q1 2021, besting the national index by 4.96 points for the same time period. 

Better-than-expected vaccination rates buoyed the outlook for many Americans, while a newly signed fiscal relief package provided additional stimulus checks, as well as support for the unemployed and for state governments, Citizens said. These developments helped to boost business activity and put the recovery on more stable footing, based on CBCI indicators. This momentum extended across both manufacturing and services sectors, though mixed signs in employment and new-business applications underscored the uneven progress across the economy.

“Positive vaccination trends have been really powerful in facilitating the normalization of consumer activity, providing a big boost to economic activity. The fiscal package signed in March was a further step toward recovery,” said Tony Bedikian, head of global markets at Citizens. 

The index draws from public information and proprietary corporate data to establish a view of business conditions across the country. An index value greater than 50 indicates expansion and points to positive business activity for the next quarter.

The Business Conditions Index is derived from a number of underlying components, many of which improved during the first quarter.

As of Q1 2021, the methodology was modified, with new-business applications and initial jobless claims replacing the wage growth and employment components. The changes were designed to increase timeliness and adjust for the impact of month-to-month trends across the quarterly period.

The Institute for Supply Management (ISM) Manufacturing and Non-Manufacturing Indexes both rose for the quarter, helping to buoy the Citizens Index.

Initial jobless claims showed periods of weakness, though the trendline was improving by the end of the first quarter, and new-business applications were flat.

Companies in the health care sector led performance for the quarter, according to the bank’s proprietary business activity data. The index also indicated strong performance from telecommunications companies, government-sector businesses and consumer goods businesses.

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