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Business Confidence Grows as Employers See Sustained Recovery

Posted by Andre Mayer on Mar 6, 2012 9:17:00 AM

Business confidence rose for a fourth consecutive month during February as Massachusetts employers found themselves buoyed by what appears to be a sustained recovery across the state and national economies.

BCI.February2012.SmallThe AIM Business Confidence Index (BCI) increased 2.1 points to 54.9, its highest reading since April 2011. The Index is up 3.7 points over one year and now rests comfortably in positive territory on the 100-point BCI scale.

“The shift in business sentiment is primarily a matter of diminishing negatives,” 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 more positive about conditions for their companies than about the state’s business climate, and more positive about the state than about the national economy … Looking ahead six months, 56 percent of survey respondents expect ‘good’ conditions for their companies, compared to only 5 percent ‘bad’ – the best numbers of the recovery.”

The rise in employer confidence last month was driven by a growing belief that no catastrophic economic developments appear ready to knock the recovery off track. The Future Index of expectations for six months ahead surged 3.8 points during February to 57.7.

“Employers appear to be responding less to improved conditions than to increasing confidence that nothing is likely to happen that they can’t handle,” said BEA member Sara L. Johnson, Senior Research Director, Global Economics, IHS Global Insight.

“Although economic growth remains sluggish, and threats persist, most believe the worst is well behind us, and they are becoming reconciled to a slow and bumpy, but ultimately manageable, expansion phase.”

Employers remain most bullish about their own prospects. The BCI’s Company Index added 2.3 points in February to 58.6, up four points on the year.  The Sales Index was up six-tenths to 56.2, and Employment Index rose by 2.5 to 55.9.

The Massachusetts Index of conditions within the commonwealth was up 1.9 points in February to 53.2, while the U.S. Index of national conditions rose 1.3 points to 45.4. 

“February’s business confidence results are hopeful, a milepost telling us that we are making progress in a long, slow recovery,” commented Richard C. Lord, President and CEO of AIM and a BEA member.

Topics: AIM Business Confidence Index, Massachusetts economy

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