Citizens: U.S. Business Conditions Recover with Increased Vaccinations, Fiscal Package

Continued economic recovery from the shock of the COVID-19 pandemic kept the Q1/21 national Citizens Business Conditions Index (CBCI) in upbeat territory with a reading of 53.3. This compares with a Q4/20 reading of 56. An index value greater than 50 indicates expansion and points to positive business activity for the next quarter.

Better-than-expected vaccination rates buoyed the outlook for many in the United States, while a newly signed fiscal relief package provided additional stimulus checks as well as support for the unemployed and for state governments. 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, although 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 towards recovery,” Tony Bedikian, head of global markets at Citizens, said.

The CBCI is derived from multiple underlying components, many of which improved during the first quarter. As of Q1/21, 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’s Manufacturing and Non-Manufacturing Indexes both rose for the quarter, helping to buoy the CBCI.
  • Initial jobless claims experienced periods of weakness, although the trend line was improving by the end of the first quarter, while new-business applications were flat.
  • Companies in the healthcare sector led performance for the quarter, according to Citizens’ proprietary business activity data. The CBCI also indicated strong performance from telecommunications companies, government sector businesses and consumer goods businesses.

The CBCI draws from public information and proprietary corporate data to establish a view of business conditions across the United States.

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