Citizens Business Conditions Index™ Rebounds Slightly in Q3

Strong labor market, resilient consumer drive return to modest growth

A strong labor market and resilient consumer trends supported a slight improvement in economic conditions during the third quarter as inflation showed some signs of abating, according to the national Citizens Business Conditions Index™ (CBCI), released today. After falling below 50 in the second quarter, the index rose to 50.7 in the third quarter, signaling a return to modest growth.

New business applications leveled off during the quarter, but operating conditions for small businesses generally improved as interest rates stabilized following the Federal Reserve’s latest rate hike in July. Citizens’ proprietary data on client revenue was stronger across most industries during the third quarter. Consumer Services and Healthcare remained among the top sectors while the manufacturing industry continued to contract, though at a slower rate.

“The U.S. economy was resilient in the third quarter as inflation showed signs of easing despite continued strength in the labor market,” said Eric Merlis, managing director and co-head of global markets, Citizens. “While the operating environment remains fragile, Citizens’ middle market and mid-corporate clients continue to perform reasonably well.”

The underlying components of the index showed a slight rebound in the business environment during the third quarter. Three of the five components provided a boost to the Index level, while one was neutral and one weighed on the reading.

  • Employment trends, which are measured by initial jobless claims as an Index component, strengthened throughout the quarter, providing a tailwind for the Index.
  • The ISM non-manufacturing component grew as demand for services remained high and inflation eased.
  • The activity data of Citizens’ commercial banking clients was relatively strong across regions, suggesting that conditions at many middle-market and mid-corporate businesses remain positive.
  • New business applications held fairly steady.
  • The ISM manufacturing index indicated that the sector continued to contract but did so at a slower rate as the reading improved relative to recent levels.

The third-quarter CBCI revealed a business environment that continues to grapple with the impact of higher rates, but one that has benefited more recently from signs that inflation may be moderating. While operating conditions remain mixed, the economy exited the quarter with momentum.

“The third-quarter CBCI shows a business environment that improved over the last quarter as initial jobless claims declined, consumer trends remained resilient and inflation eased,” said Merlis. “From here, the focus will continue to be on policy-makers as they navigate a complex economic and geopolitical environment and attempt to walk the fine line toward a soft landing.”

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 $225.3 billion in assets as of September 30, 2023. 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 full-service customer contact center and the convenience of approximately 3,300 ATMs and approximately 1,100 branches in 14 states and the District of Columbia. 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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