The Citizens Business Conditions Index (CBCI) fell to 48.2 in Q1/24 as business activity normalized from elevated levels in recent quarters. The reading below 50 indicates that economic momentum slowed during the first quarter against a backdrop of moderately restrictive monetary policy.
Labor markets and consumer trends remained resilient in the first quarter, according to the index; however, Citizens’ proprietary data showed softening revenue trends during the period after solid performance across most industries in the second half of 2023. New business applications also fell compared to the fourth quarter, though they remain well above pre-pandemic levels.
“While the index shows business conditions dipping in the first quarter, the overall U.S. economy remains fairly healthy,” Eric Merlis, managing director and co-head of global markets at Citizens, said.
The underlying components of the index reflected mixed dynamics in the business environment. One of the five components provided a boost to the index, while one was neutral and three weighed on the reading.
“The first quarter index reading shows a business environment that is slowing as higher interest rates weigh on economic conditions,” Merlis said. “While concerns about inflation persist, the data provides evidence that tighter monetary policy is having its intended effect.”
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