PROVIDENCE – The prospect of vaccinations and the outcome of the November election boosted business conditions across the country and in Rhode Island by the end of 2020, according to Citizens Bank’s Quarterly Business Conditions Index published on Friday.
Rhode Island’s fourth-quarter conditions index value of 62.8 marks a 0.6% bump over the prior quarter, despite the surge in COVID-19 cases at the end of the year. The state conditions score also increased 1.6% year-over-year.
Nationally, the fourth quarter index value of 61.4 represents a “modest” increase of 0.3%, the company stated, the second consecutive quarter of improvements after the COVID-19 pandemic caused a downturn on conditions earlier in 2020. The bank attributed the slight increase to optimism over vaccinations and increased election certainty, which were partially offset by spiking cases nationwide.
“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,” said Tony Bedikian, head of global markets at Citizens, said in a statement. “The manufacturing sector has been strong and the overall economy has shown resiliency since the middle of the second quarter last year.”
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.
As the report stated, growth was not spread equally across industries nationally. Financial and energy sectors showed the strongest performance, bolstered by Federal Reserve policies and rallying oil prices respectively. Manufacturing was also a “major contributor” to the quarterly increase.
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.
The proprietary measure of business activity showed “softer” numbers nationally, although the Northeast region led in quarter-over-quarter gains in this measurement, the report stated. Still, the Northeast business conditions remain farthest below pre-pandemic levels thanks the impact of the pandemic and a spike in retirements.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
