PROVIDENCE – A slight quarterly decrease in Citizens Bank’s Business Conditions Index could be a harbinger of the devastating economic effects of the new coronavirus, the bank announced on Monday.
First-quarter values for both Rhode Island and the national economy ticked down slightly compared to the prior quarter, though numbers remain high, reflecting a strong economic stance prior to the onset of the new coronavirus.
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Rhode Island’s quarterly index value decreased 4 basis points to 61.4, versus the national 2-basis-point decline to 60.8. Year-over-year, Rhode Island also saw a larger decrease than the national average – 8 basis points versus 7.
Still, Rhode Island continues to enjoy a slightly favorable position relative to the national economy – a function of efforts in recent years to transform its workforce to better fit the needs of employers, according to Keith Kelly, president of Citizens Bank Rhode Island.
It’s too early to say how Rhode Island will fare relative to the nation come the second quarter, according to Kelly, who expected the next iteration of the quarterly conditions index to be much more predictive of the true economic impact of COVID-19. He noted that the state’s reliance on the hospitality industry – particularly hard hit by the pandemic – might translate to a greater impact on its quarterly index value.
The national index decrease reflects negative growth in three of the index components – non-manufacturing Purchasing Managers Index, unemployment and wage growth. However, the manufacturing Purchasing Managers Index increased in the first quarter, reflecting an improved trade backdrop between the United States and China as well as the certainty provided by Brexit. A fifth measure – based on metrics related to business activity of the bank’s commercial clients – showed strong momentum among middle-market businesses which was offset by the domestic onset of the pandemic in late February.
Across sectors, commercial and energy service companies saw the biggest quarterly decline, while those in financial, government, technology and healthcare-related industries reported stronger activity.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
