The Citizens Business Conditions Index, a data-driven metric that traces economic momentum, has grown in New Jersey for the second straight quarter, coming in at 52.57.
The CBCI also is up nationally, coming in at 52.2.
Any reading above 50 indicates that economic momentum is building. New Jersey fell well below that number in the fourth quarter of 2023, when it recorded a score of 47.47 — the state’s lowest since the first quarter of 2020 (or the start of the pandemic). This quarter marked the highest mark since New Jersey hit 52.76 in the first quarter of 2023.
Nationally, the CBCI rose to 52.2 in the second quarter.
Citizens officials said the increase can be traced to higher company revenue coupled with the prospect of easing monetary policy, which lowers the cost of capital.
Eric Merlis, managing director and co-head of global markets at Citizens, described it this way.
“Increasing company revenue drove the index higher in the second quarter as our clients felt some wind in their sails,” he said.
The underlying components of the index were neutral, but provide a solid foundation for growth in the coming months, including:
- The ISM nonmanufacturing component (also known as Services Purchasing Managers Index) remained in expansionary territory but declined from the first quarter. The ISM manufacturing component was contractionary for the seventh consecutive quarter.
- Employment trends, as measured by initial jobless claims, continued to show resilience and were neutral to the index.
- New business applications were neutral for the quarter, but remain elevated relative to pre-pandemic levels.
- The activity data of Citizens’ Commercial Banking clients showed strong revenue trends after a weak first quarter, serving as the main engine for the index’s uptick.
Overall, the second-quarter CBCI reveals a business environment that has adapted to a sustained period of higher rates, Merlis said.
“The second-quarter index reading shows a business environment that is turning the corner with the prospect of easing monetary policy and cheaper capital,” he said. “Concerns about inflation persist, but the economy has shown resilience and seems poised for greater expansion.”
