Citizens Business Conditions Index™ dips in Q2
27 Julho 2023 - 10:01AM
Business Wire
Rising unemployment claims, slowing business
formation weigh on results
Rapid interest rate increases to curb inflation continue to
weigh on economic conditions, according to the national Citizens
Business Conditions Index™ (CBCI), released today. A rise in
unemployment insurance claims and a slowdown in small business
formation caused the Index to dip to 48.5 in the second
quarter.
While the labor market has started to show some softening in the
face of aggressive Federal Reserve rate hikes and the manufacturing
sector slowed given high inventory levels and a shift in
consumption towards services, Citizens’ proprietary data on client
revenue continued to be strong across most industries during the
second quarter. Consumer Services and Healthcare continue to be
among the top sectors due to their ability to pass on costs to
customers.
“The overall U.S. economy has begun to slow in the second
quarter even though Citizens’ middle market and mid-corporate
clients continue to fare very well,” said Eric Merlis, managing
director and co-head of global markets, Citizens. “The Fed’s tough
medicine seems to be working and the rate of inflation is falling,
with the labor market beginning to show some weakness and new
business formation stalling.”
Relief from Inflation Surprises
The underlying components of the Index show the business
environment is mixed as policy-makers try to thread the needle and
curb inflation without too much collateral damage. Three of five
components pulled down the Index level, while two were
positive.
- New business applications decreased in most states.
- Initial jobless claims increased for the quarter and national
employment numbers started to soften.
- The ISM manufacturing index decreased as the sector is more
sensitive to rising interest rates.
- The proprietary activity data of Citizens’ commercial banking
clients was broadly strong, suggesting that the conditions at many
middle-market and mid-corporate businesses remain positive.
- The ISM non-manufacturing component of the Index grew as
consumers spent more on services and companies in these sectors
were better able to pass on costs.
The second-quarter CBCI revealed a business environment that is
struggling to adapt to the interest rate hike campaign from the Fed
despite a pause in rate increases in June. Up until recently, the
labor market has had a stabilizing effect as business conditions
search for a new normal.
“The second-quarter CBCI shows a business environment where
activity has slowed as interest-rate hikes seem to be working to
curb inflation,” said Merlis. “All eyes will be on the job market
to see if the Fed can balance its efforts to fight inflation while
minimizing impacts on employment.”
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Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and
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large corporations and institutions. Citizens helps its customers
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version on businesswire.com: https://www.businesswire.com/news/home/20230727370307/en/
Frank Quaratiello 617.543.5810
frank.quaratiello@citizensbank.com
Citizens Financial (NYSE:CFG)
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