The national Citizens Business Conditions Index (CBCI) rose to 51.0 in the final quarter of 2024, bolstered by solid corporate revenue trends and sustained strength in the service sector. The reading indicates that business conditions improved modestly in the fourth quarter, as the Federal Reserve continued to lower interest rates and election-related uncertainty abated.

While employment trends and new business growth were neutral to the index on a national level, severe weather events and labor strikes in the automotive and aerospace sectors created challenges in certain geographies. These idiosyncratic headwinds were more than offset by resilient consumer spending and strong revenue trends across most industries.

“Business conditions continued to improve in the fourth quarter, and the U.S. economy is entering 2025 with some momentum,” said Eric Merlis, managing director and co-head of global markets, Citizens. “While severe weather events may continue to present idiosyncratic headwinds in the near-term, overall labor and consumer trends remain healthy and our clients are optimistic about the outlook for business in the year ahead.”

The underlying components of the index reflected the modest improvement in business conditions in the fourth quarter, establishing an optimistic starting point for the new year.

• The activity data of Citizens’ Commercial Banking clients showed robust corporate revenue trends across most industries and geographies, driving the uptick in the Index.
• Strength in the service sector provided an additional boost, as the ISM non-manufacturing component also remained expansionary.
• Employment trends, as measured by initial jobless claims, continued to show resilience as the labor market rebalances. They were neutral to the Index.
• New business applications also had a neutral impact.
• The ISM manufacturing component remained contractionary for the ninth consecutive quarter, though it improved slightly from the third quarter.

Overall, the fourth quarter CBCI reveals a healthy business environment that has started to benefit from falling interest rates and moderating inflation concerns.

“Fed rate cuts helped support a constructive business environment in the fourth quarter, particularly as companies put the uncertainty of the 2024 U.S. election cycle behind them,” added Merlis. “Now, attention turns to the impact of a new presidential administration and the pace of additional monetary easing from here.”