The second quarter of 2020 began with many businesses reeling from the shutdown of the global economy caused by the COVID-19 pandemic, according to a new report from Citizens Bank. Most economic indicators posted disastrous results while the U.S. government and Federal Reserve rushed to enact legislation or policies to soften some of the worst impacts of the crisis.

By quarter end, the Citizens Business Conditions Index™ showed surprising stability (decreasing only from 60.8 to 60.3) as those unprecedented actions have reversed the U.S. economy’s trajectory.

There is still considerable uncertainty about the third quarter and beyond, especially as COVID-19 cases surge in several states, but the end of the second quarter showed marked improvement over March and April.

Some sectors have been harder hit than others and some businesses may not survive the downturn, but the recovery we are seeing has featured more ups than downs so far.

“The pandemic-induced shutdown of the global economy was one of the most sudden drops we have ever seen in business activity and employment, but the unprecedented response by the government and the Federal Reserve was just as swift,” said Tony Bedikian, Head of Global Markets for Citizens Commercial Banking. “With that stimulus, we saw a steady turnaround in markets. There is still a lot of uncertainty – and that will likely continue until there is a vaccine – but the government and ‘Fed’ acted quickly to try to soften the economic blow and help bridge companies and consumers to the other side of this crisis.”

The Index is derived from a number of underlying components, most of which improved or held steady over the course of the second quarter.

• The Manufacturing and Non-Manufacturing Purchasing Managers’ Indices (PMI) from the Institute of Supply Management (ISM) were up for the quarter after a steep drop-off in April as many businesses reopened in May or June. Some of the uptick in manufacturing can be attributed to manufacturers repurposing their operations to meet demand for pandemic-related products.
• Employment decreased overall during the second quarter, but wage growth ticked up as the pandemic tended to result in the loss of more lower-wage jobs.
• Proprietary measures of business activity among Citizens Commercial Banking’s more than 7,000 clients across the United States were basically flat with some sectors improving and others still languishing.

The Index draws from public information and proprietary corporate data to establish a unique view of business conditions across the country. An index value greater than 50 indicates expansion and points to positive business activity for the next quarter.