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Citizens Business Conditions Index™ Dips Slightly, Remains in Expansionary Territory Due to Continued Robust Demand

Citizens announced today that the quarterly national Citizens Business Conditions Index™ (CBCI) was a healthy 57.1, just slightly down from the second quarter’s 57.4. The third quarter’s reading reflects the continued strength in the recovery since COVID-19 stunned the economy and the markets in 2020. The CBCI has been in expansionary territory (greater than 50) for four straight quarters.

“Business activity is incredibly strong and confidence levels are quite high,” said Tony Bedikian, head of global markets at Citizens. “We haven’t fully exited the pandemic yet, but at this stage most parts of the economy have established some normalcy given the benefit of vaccines and the fiscal and monetary stimulus that continue to provide support towards full recovery. Many companies are doing well and would be doing even better if it weren’t for headwinds such as supply chain disruption and labor shortages.”

Nearly all of the underlying components in the CBCI demonstrated strength in the quarter. The ISM indexes for manufacturing and non-manufacturing sectors were notably robust. Monthly readings for the two measures continued to trend in the 60s through the third quarter, well above the index averages through 2013-2019, another expansionary period. Such high readings are often seen in the first wave of a recovery, but it is unusual to see them persist at that level for such a protracted time. The ISM indexes capture sentiment along with activity, and these high readings demonstrate the confidence throughout the economy.

Other measures of business activity were incredibly high, including the proprietary activity data of Citizens’ commercial banking clients, which is an underlying component of the CBCI as well.

The same trends were evident in consumer spending, which has been supported by continued improvement in employment (another underlying component of the CBCI). Spending on clothing, health care and gasoline has fully recovered since the pandemic began, though spending on travel accommodations and dining out still hovered slightly below normal, according to an analysis of card transactions from the U.S. Bureau of Economic Analysis.

The Index is derived from a number of underlying components, almost all of which improved during the third quarter.

  • The Institute for Supply Management (ISM) Manufacturing and Non-Manufacturing Indexes both rose for the quarter, helping to lift the Citizens Index.
  • Initial jobless claims dropped, another positive sign.
  • New-business applications, another underlying component of the CBCI, was the only metric to reflect lower momentum in the third quarter. However, the pace of applications can be volatile from one period to the next, and the third-quarter data fell within a normal range.
  • With rallying commodity prices, the energy and basic materials sectors led performance in the proprietary data among Citizens’ commercial banking clients, followed by consumer goods and services companies. Financials, government and healthcare companies were the laggards but not by much – performance trends were healthy across all sectors in Citizens’ dataset.

Despite ongoing challenges from the pandemic, the third quarter was a period of strong demand across most sectors of the economy. With the continued support of low interest rates and fiscal spending initiatives, most sectors seem to have established a healthy trajectory of growth. Concerns over higher inflation have increased, and the employment sector still has ground to cover to reach pre-COVID status. Still, business conditions have benefited as the pandemic eases and the recovery matures.

The Index draws from public information and proprietary corporate data to establish a unique 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. For more information about this past quarter’s Index, please visit here.

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 $187.0 billion in assets as of September 30, 2021. 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 24/7 customer contact center and the convenience of approximately 3,000 ATMs and approximately 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. 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 or visit us on Twitter, LinkedIn or Facebook.


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