PROVIDENCE – Bolstered by federal government aid and a strong “shop local” mentality, Rhode Island saw stronger business conditions compared to last quarter and the prior year, according to Citizens Bank’s quarterly Business Conditions Index published on Monday.
The bank’s second-quarter business conditions index for Rhode Island of 62.5 represents a 1.8% increase over the first quarter, and a 0.8% year-over-year increase. In comparison, the national index was 60.3, a 0.8% decrease over the prior quarter and a decline of 1.5% from a year ago.
An index greater than 50 indicates expansion and is a reflection of expected improvement in business growth for the next quarter, according to the bank.
Keith Kelly, president of Citizens Bank Rhode Island, attributed the state’s strong performance primarily to changes in consumer habits. With business and personal travel largely off-the-table, people stayed local, injecting their federal stimulus money into supporting local businesses. Federal stimulus aid was also integral to the state’s economic recovery, with continued recovery largely contingent upon additional stimulus programs and funds, Kelly said.
Eighty percent of the index is based on public data, such as ISM Manufacturing and Non-Manufacturing, Unemployment and Wage Growth numbers. Twenty percent of the index is based on metrics related to the business activity of the bank’s commercial clients.
According to Citizen’s data, commercial service companies showed the strongest quarter-over-quarter growth, while government banking clients experienced the most strain. Manufacturing and nonmanufacturing indexes both rebounded after dramatic cuts in April as many businesses reopened and manufacturer repurposed operations to meet new demands prompted by the pandemic. Employment continued to decrease, but wage growth ticked up since a majority of jobs lost were in lower-wage sectors, the bank said.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
