Vaccine Optimism Boosts Q4/20 Citizens Business Conditions Index

The national Citizens Business Conditions Index posted a second consecutive quarter of gains as optimism fueled by COVID-19 vaccine announcements and increased election certainty began to outweigh concerns about spiking pandemic cases.

The Index rose modestly to 61.4 in the final quarter of 2020, up from 61.2 at the end of the third quarter, showing a continuing rebound after the impact of the COVID-19 pandemic put downward pressure on the index earlier in 2020.

Some sectors continued to fare better than others, with this quarter’s report showing strength in the financial and energy sectors.

“The fourth quarter was a real turning point. With the vaccine news and a clear outcome for the presidential election, we saw a lot more confidence about the future among business leaders,” Tony Bedikian, head of global markets at Citizens, said. “The manufacturing sector has been strong and the overall economy has shown resiliency since the middle of the second quarter last year.”

“The first quarter of 2021 has already seen major news events in Washington, D.C. and retail trading volatility shaking Wall Street,” Bedikian said. “As our M&A Outlook also recently noted, we are seeing a healthy environment for corporate deal-making spurred by the vaccine rollout and anticipated tax policy changes.”

The Index is derived from several underlying components, many of which improved during the fourth quarter.

  • The Institute for Supply Management (ISM) Manufacturing Index rose sharply for the quarter, helping to buoy the Citizens Index, while the Non-Manufacturing Index dipped.
  • Employment increased overall during the fourth quarter despite a disappointing jobs report for December. Wage growth was flat.
  • Proprietary measures of business activity in the fourth quarter among Citizens’ more than 7,000 clients across the United States were down slightly.

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.

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