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Sputtering Economy Erodes Massachusetts Business Confidence

  
  
  

A sputtering global economy eroded the confidence of Massachusetts employers during August, leaving prospects for job growth uncertain in the Bay State through the end of the year.

Business ConfidenceThe Associated Industries of Massachusetts Business Confidence Index fell 1.3 point to 49.2, moving into negative territory on its 100-point scale for the first time since September 2010. Manufacturing led the downturn in the face of persistent uncertainty in the western European economies that are key buyers of goods and services made in Massachusetts.

And three days after the government reported no net job growth nationally during August, the AIM Index hinted that Massachusetts employers are growing cautious about hiring. More than one in three (35 percent) respondents reported adding jobs during the past six months, but only one in four (25 percent) reported plans to hire in the next two quarters.

“Disappointing economic growth continues to take a toll on business confidence, with turmoil in financial markets during the survey period an exacerbating factor,” said Raymond G. Torto, Global Chief Economist at CB Richard Ellis Group, Inc. and Chair of AIM's Board of Economic Advisors (BEA).

“Massachusetts employers are increasingly concerned about where the economy is headed, and some fear that it will slip back into recession.”

BEA member Michael Goodman, Associate Professor of Public Policy at the University of Massachusetts Dartmouth, said the August Index shows unmistakable signs of weakness in the job market.

"Significantly, the share of respondents reporting layoffs in the past six months (14 percent) was nearly identical to the proportion reporting plans to cut jobs over the next six months (15 percent), indicating an expectation of slower job growth rather than more layoffs," Goodman added.

The 49.2 confidence reading was slightly higher than the 47.7 figure posted a year earlier, but well shy of the  56.1 number posted in April.

 Among the biggest losers in the Index was the Future Index of prospects for six months ahead, which dropped 2.5 points to 48.4. Another significant loser was the Massachusetts Index of conditions within the commonwealth, off 2.4 points to 44.1. The U.S. Index of national conditions saw a smaller decline, down six-tenths to 37.2.

Richard C. Lord, President and CEO of AIM and a BEA member, said sliding confidence reflects weak economic growth throughout the economy.

“Under these circumstances, government has no ‘magic bullet’ at its disposal; what it can do is demonstrate positive engagement with economic issues, and act to promote stability, predictability, and a concern with job creation, which is our most important challenge,” Lord said.

Comments

Amazingly, it looks like demand and NOT excessive regulations or onerous taxes are the problem causing confidence concerns among businesses. No kidding.
Posted @ Tuesday, September 06, 2011 9:57 AM by Kevin
Think how they must be feeling in the rust belt... 
 
It is amazing, really, how the marketplace is spurred, or not, by consumer confidence rather than particular policies, products or tax structures. Right now, Americans are starting to ask themselves what they bring to the global marketplace that is exciting, compelling and competitive. And many workers do not feel comfortable with what they see. 
 
Our only hope is innovation. And at least Massachusetts has a smart, motivated labor pool from which to draw.
Posted @ Tuesday, September 06, 2011 11:01 AM by Jim
Governments don't create jobs, business' do. Restrictive regulations and higher taxes don't create jobs either. Government needs to step a way and let business do business. What is sad is that it won't happen. "Do what I say not what I do" is the current attitude on either side of the isle. Small business owner in MA.
Posted @ Tuesday, September 06, 2011 11:28 AM by Michelle
It's amazing that some can conclude from the above information that onerous regulations and high taxes are not part and parcel of the lethargic performance of our economy. Companies are psychologically unprepared and unwilling to take risks under the present business climate and are continually awaiting the next government lead shoe to drop on their heads. Under such conditions no new hires becomes the guiding mantra.
Posted @ Tuesday, September 06, 2011 5:03 PM by Ralph Wilbur
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