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Greek Crisis Dampens Employer Confidence

Posted by Andre Mayer on Jul 7, 2015 9:44:30 AM

Confidence among Massachusetts employers ebbed for a third consecutive month in June as uncertainty in Greece, Europe and China outweighed a strengthening economy at home.

BCI.June.2015The Associated Industries of Massachusetts Business Confidence released this morning declined by one point in June to 56.3, extending its decline from March’s post-recession high of 60.2. Confidence remained well above the 50-point level that signifies optimism, and 2.6 points better than in June 2014.

The Massachusetts Index, assessing business conditions within the Commonwealth, at 56.9, was the biggest gainer on both the month (+1.0) and the year (+6.0). The U.S. Index of national business conditions was up 0.7 from May and 2.6 from last June at 50.8.

“The first quarter of 2015 was a very weak one for the economy, but a strong one for the AIM Index, which gained each month; whereas the second quarter, though much better in terms of economic growth, has seen three monthly losses,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The two indicators of domestic business climate actually rose in June,” he pointed out. “Meanwhile, the sub-indices related to survey respondents’ own operations lost ground, which we interpret as reflective of growing uncertainty. Events overseas, in China and in Greece and the Eurozone, are casting shadows on relatively good conditions at home.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The bullish view of the Massachusetts economy represents a profound change in employer attitudes over the 24 years that AIM has published the Business Confidence Index, according to association President and Chief Executive Officer Richard C. Lord.

“In July 1991, the Massachusetts Index of in-state conditions was at 25.8, about half the U.S. Index’s 51.2; it took 65 months for the state indicator to surpass its national counterpart, and 78 months to do so two months in a row.  By contrast, the Massachusetts Index has now outpaced the U.S. Index for 73 consecutive months,” Lord said.

“Much of this improvement in employer’ perception of Massachusetts business conditions is due to a positive engagement with employer issues on the part of elected officials of both parties.”

Employer evaluations of their own business prospects weakened last month amid financial concerns on two continents.

The Current Index, which assesses overall business conditions at the time of the survey, was off 1.2 points on the month at 56.2, while the Future Index, measuring expectations for six months out, lost seven-tenths to 56.4. The Company Index, reflecting overall business conditions, lost 2.2 points 58.0; the Sales Index was off 2.1 to 57.9; and the Employment Index was down 3.3 to 54.7.

“These are still positive numbers, revealing wariness rather than fear about the second half of 2015,” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, a BEA member.

“Greece is a small economy and a tiny market for Massachusetts exports; despite talk of contagion to Spain or Italy, the Eurozone isn’t collapsing and there isn't likely to be any meaningful impact in the U.S. or Massachusetts. China’s economic slowdown is a more substantive matter, one that American investors rightly should be watching carefully.”

Topics: AIM Business Confidence Index, Massachusetts economy

Loss of Economic Momentum Gives Employers Pause

Posted by Christopher Geehern on Jun 2, 2015 8:16:00 AM

Two reports issued today by Associated Industries of Massachusetts (AIM) suggest that employers have grown wary of an economic recovery that appears to have lost momentum during the first half of 2015.

BCI.May.2015The big question, according to analysts, is how much has momentum slowed and for how long?

The monthly AIM Business Confidence Index fell for a second consecutive month in May after reaching a 10-year high in March. The Index lost 1.8 points to 57.3 on a 100-point scale, still comfortably in positive territory but showing moderating expectations for growth during the remainder of the year.

Meanwhile, the annual AIM General Wage Survey Report found that for the third consecutive year, a majority of AIM-member companies have targeted merit and general increase spending at 3 percent for 2015. Economists say the modest wage gains reflect the fact that many organizations have decided to keep pace with an expanding economy by boosting productivity and capital investment rather than payrolls.

Both reports come four days after the government announced that the US economy contracted 0.7 percent during the first three months of the year. The economic numbers have prompted the Federal Reserve to postpone an interest-rate hike that was widely expected in June.

Raymond G. Torto, Chair of the AIM Board of Economic Advisors (BEA) that produces the Business Confidence Index, said employer optimism is up 2.5 points from last May, “but coming off an upward surge from August through March, business confidence seems to have lost momentum.”

“The Index performed well during the first quarter of this year, but now it is weakening even as growth appears to be picking up,” said Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.   

He noted that economists’ forecasts for expansion in 2015 have moderated. “Our survey does reflect lower expectations for the six months ahead,” he said. “We also see lagging confidence among manufacturers, whose exports are hurt by the strong dollar, and among mid-size companies.” 

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

The May confidence report showed employer assessment of current business conditions down nine-tenths at 57.4, while their expectations for the next six months, lost 2.8 points to 57.1.

One bright spot came in the Employment Index, which reached its highest level since September 2005. Employment expectations for the next six months were particularly strong, with 37 percent of responding employers planning to add staff, while 14 percent expect reductions.

The General Wage Survey report, based on responses from several hundred Massachusetts employers, showed that overall merit increase budgets for 2015 average 2.69 percent when companies planning a zero percent increase are included. That figure is down from the 2.71 percent posted in 2014; higher than the 2.53 percent in 2013, 2.55 percent in 2012 and 2.4 percent in 2011.  The percentage of companies providing no wage increases dropped in half from 14 percent in 2013 to 7 percent this year.

Those numbers are consistent with national compensation surveys that appear to agree that wages generally have not risen as predictably as they have in previous recoveries.

But Andre Mayer, Senior Advisor at AIM, says those aggregate numbers mask growing wage acceleration in many of the technical and managerial fields in which Massachusetts is strong.

“Even as the overall averages show only modest increases in compensation, the competition for experienced incumbent workers with high-demand skills is heating up. Employers are not only becoming more willing to hire, they are becoming more willing to pay a premium for the skills they need,” Mayer said.

Topics: Compensation, AIM Business Confidence Index, Massachusetts economy

Confidence Pulls Back on Manufacturing Concerns

Posted by Andre Mayer on May 5, 2015 10:41:24 AM

Employer confidence paused from an eight-month run-up during April as Massachusetts manufacturing companies grew skittish about weak growth domestically and challenges in global markets due to the stronger dollar.

BCI.April.2015The Associated Industries of Massachusetts Business Confidence Index declined 1.1 points to 59.1 last month, pulling back from a post-recession high reached in March. The measure remains six points above its level of April 2014 despite a weak first quarter of national economic growth.

“The Index’s decline is attributable to lower confidence among the state’s manufacturers…” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

Paul Bolger, President, Massachusetts Capital Resource Company, added that “In addition to weaker-than-expected domestic growth, Massachusetts manufacturers are seeing their exports hit by a strong dollar and by particular weakness in their two major market regions, Western Europe and East Asia.

“Manufacturers and survey respondents outside Greater Boston were markedly less positive than others about in-state business conditions,” he added.

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The April pullback broke a string of monthly gains in business confidence stretching back to August 2014. Employers continue to have a brighter view of the state economy than of national conditions. Alan Clayton-Matthews of Northeastern University noted that Massachusetts performed better than the country as a whole during the difficult first quarter.

Three sub-indices bearing on survey respondents’ own operations all edged off fractionally in April.  The Company Index, reflecting overall business conditions, lost six-tenths to 61.0; the Sales Index was off eight-tenths to 61.7; and the Employment Index was down half a point to 57.3.

 Richard C. Lord, President and CEO of AIM, said any weakening of confidence among manufacturers has implications for the overall economy.

“Our association was founded in 1915 by Massachusetts manufacturers, and in our centennial year that group remains a core component of our diverse membership,” Lord said.

“Manufacturing is likewise a pillar of our economy, the key sector in many communities and regions of our commonwealth, and an unmatched provider of jobs that support upward mobility. So when manufacturers’ confidence lags, when they are less enthusiastic than other employers about business conditions in Massachusetts, we are concerned.” 

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Employer Confidence Finally Recovers from Recession

Posted by Andre Mayer on Apr 7, 2015 11:29:54 AM

Massachusetts employers have finally regained the confidence they had prior to the Great Recession, a grueling 73-month process that underscores the depth of the financial downturn in 2008 and 2009.

BCI.March.2015Associated Industries of Massachusetts announced this morning that its Business Confidence Index (BCI) reached 60 on its 100-point scale in March for the first time in more than 10 years, edging up four-tenths of a point to 60.2 – the same reading as in February 2005. The milestone capped a steady, yearlong 10-point advance that has seen employers shake off persistent post-recession caution and a more recent national hiring slowdown.

Even more significant was the fact that employer confidence in the Massachusetts economy reach its highest level since December 2000.

“We have been preparing the Index for almost 24 years, including three periods of economic recession,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“From a low point of 41.5 in December 1991, the Index took 29 months to get up to 60. In November 2001, the Index bottomed out at 43.0, and it finally regained the 60 level 30 months later. This time, from its all-time low of 33.3 in February 2009, the rise back to 60 has taken 73 months.”

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009.

“Last March, the Index began a sustained rise, ending more than a year of small fluctuations around neutral,” said Raymond G. Torto, Chair of the Board of Economic Advisors and Lecturer, Harvard Graduate School of Design.

What matters most about the Index reaching 60, Torto noted, is steady, sustainable pace. “The first-quarter average reading was 59.4, up from 56.3 in the prior quarter and 50.6 in the same period a year ago,” he said. “This is the Index’s best quarterly average since the fourth quarter of 2006, back before signs of impending recession became evident.”

Much of the surge in employer confidence comes with improved results from their own operations.

The Company Index of the, which assesses the situations of their own operations, rose three-tenths of a point to 61.6; the Sales Index gained eight-tenths to 62.5; and the Employment Index added 1.2 points to 57.8.

“Each sub-index is ahead by about eight points compared to last March,” noted Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC, a BEA member.

“Recent state employment reports have suggested that job creation may be slowing, so the rise of the Employment Index is particularly positive. Over the past six months, respondents reporting adding new staff have outnumbered those reporting layoffs 34 percent to 18 percent, while expectations for the next six months are much stronger with 36 percent reporting plans to hire and 9 percent expecting staffing reductions.”  

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Snow Can't Chill Employer Confidence

Posted by Andre Mayer on Mar 3, 2015 9:00:00 AM

Epic snow and cold did little to chill the optimism of Massachusetts employers as business confidence surged in February for a sixth consecutive month.

BCI.February.2015The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 1.7 points to 59.8 on a 100-point scale - a total gain of 9.8 points since the same month in 2014. The increase reflects growing employer bullishness about the state and national economies, as well as their own growth and hiring plans.

“A year ago the Index was at an even 50, which is neutral on our scale,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Since then, employers have concluded that economic growth, though uneven, is well established and sustainable. As a result, the Index is at its highest level since October 2006 (59.9), before the Great Recession, and is approaching 60 – a reading we have not seen in 10 years (62.3 in February 2005).”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

Analysts say the confidence numbers foreshadow accelerating economic growth in 2015. Employer confidence about conditions six months from now rose two full points to 62.1 in February, while readings of sales and employment activity also increased.

“For the previous six months, employers who report adding staff outnumber those with decreases by about two-to-one (31% - 16%), but for the next period the ratio is better than four-to-one (37% - 8%),” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, a BEA member.

“A determination to bring on additional personnel is in itself a very strong indication of employer confidence.”  

The sub-index for national conditions, a laggard through the recovery, is now well above 50, at its best level since August 2007, before the recession. The indicator of state conditions is just below 60, at its highest point since December 2000, before the prior downturn.

“Massachusetts employers believe that business conditions are generally good, and will continue to improve,” said Fred Breimyer, regional economist at the FDIC.

“Their optimism, though certainly restrained by the experience of severe recession, is now firmly established, and amply supported by trends in the economy.”   

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

Employer Confidence in State Hits 14-Year High

Posted by Andre Mayer on Feb 3, 2015 9:41:29 AM

Employers are more confident about the Massachusetts economy than they have been in 14 years.

BCI.January2015The Associated Industries of Massachusetts Business Confidence Index released this morning found that employer confidence in the Bay State economy surged 3.2 points to 59.3 during January on a 100-point scale. Overall business confidence rose for the fifth consecutive month, to 58.1, while the U.S. Index of business conditions nationally rose 4.0 points at 54.1.

“These are landmark figures,” said Katherine A. Kiel, Professor of Economics at the College of the Holy Cross and a member of the AIM Board of Economic Advisors.

“The national indicator is at a level not seen since before the Great Recession, in August 2007; and its state counterpart had not been this high since before the previous recession, in December 2000. Business confidence in Massachusetts conditions, like total statewide employment, did not fully recover from that earlier downturn before the next one hit.”

Richard C. Lord, AIM’s President and CEO, added, “Our members rate conditions within the commonwealth better than they have been in 14 years.”

Lord noted that the January Business Confidence Index survey included a question asking employers how they saw Massachusetts as a place to do business in 2015.

“Forty-two percent of respondents chose ‘the best’ or ‘very good,’ while only 8 percent went with ‘below par.’ It’s a credit to our business community, our work force, and our political leadership that employer perceptions are so positive,” he said.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

Economists say rising confidence leads to economic growth.

“When the Federal Reserve notes strong job growth and solid expansion, as it did in its assessment last week, it’s important to recognize that businesses are creating those jobs because they are feeling confident about the future,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

The cheers for the economy were not, however, without reservation.

The Current Index, tracking employers’ assessment of existing business conditions, edged off one-tenth to 56.1, while the Future Index, measuring expectations for the next six months, added 1.7 to 60.1.

The three sub-indices related to survey respondents’ own operations all weakened in January. The Company Index, which assesses the situations of their own operations, was down a point to 59.1; the Sales Index shed six-tenths to 60.7; and the Employment Index fell 2.8 to 53.9.

“The sales and employment numbers are off for the second consecutive month,” noted Michael Goodman, Associate Professor of Public Policy, Executive Director of the Public Policy Center at UMass Dartmouth, and a BEA member.

“However, respondents expect both sales and hiring to increase in the next six months. Over the past six months, respondents reporting adding new staff have outnumbered those reporting layoffs 29 percent to 22 percent, while expectations for the next six months are much stronger with 33 percent reporting plans to hire and 11 percent expecting staffing reductions.”  

Topics: AIM Business Confidence Index, Massachusetts economy

Employer Confidence Highest Since 2007

Posted by Andre Mayer on Jan 6, 2015 9:52:35 AM

Massachusetts employers are more confident about the economy than at any time since before the Great Recession.

BCI.December.2014It is a confidence that may reflect a recovery that has finally gained enough momentum to tighten a labor market that has remained slack since the economy bottomed out in 2009.

The Associated Industries of Massachusetts Business Confidence Index (BCI) released this morning ended 2014 at 57.3, 7.1 points above last December’s level and its highest point since before the recession in July 2007.

“Fundamentals are looking much better – unemployment is down and job creation is running strong nationally and in Massachusetts, which shows up in rising consumer confidence; the federal deficit and the trade deficit are shrinking; and of course the stock market has done well,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Despite significant areas of weakness in the global economy, Massachusetts employers have ample cause to be optimistic.”  

Analysts say that optimism and a strengthening underlying economy may finally make the recovery feel like a recovery in 2015.

“For the second half of 2014, twice as many employers report increasing their staff (34 percent) as cutting jobs (17 percent); and expectations are likewise positive for the first half of 2015 (33 percent – 9 percent),” said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, a BEA member.

“This is in line with what we have been seeing in state employment reports, and raises the question of how quickly the Massachusetts labor market may tighten in the year ahead.”  

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Massachusetts Index, assessing business conditions within the commonwealth, added a point on the month to 56.1, and the U.S. Index of national business conditions was up four-tenths to 50.1. The Current Index, which assesses overall business conditions at the time of the survey, was up 1.2 points to 56.2, while the Future Index, measuring expectations for six months out, shed a tenth to 58.4. The annual gains were 7.6 and 6.8 respectively.

Employers in the manufacturing sector were somewhat less positive (55.5, +0.2) than other employers (59.4, -0.1) as some companies continue to struggle with a changing economic landscape.

“For some employers the recession is in the past, while others are finding success elusive in a changed environment,”  Paul Bolger, President, Massachusetts Capital Resource Company.

Topics: AIM Business Confidence Index, Massachusetts economy

Employers Expect Happy New Year

Posted by Andre Mayer on Dec 2, 2014 9:19:20 AM

Improving economic fundamentals and the prospect of successful divided government in Massachusetts have left Bay State employers feeling merry about 2015.

BCI.November.2014The Associated Industries of Massachusetts Business Confidence Index rose 1.9 points in November to 56.8, leaving it with a gain of 6.6 for the year. More important, however, was the fact the employer sentiment about the next six months soared 4.3 points to 58.5, while confidence among executives in the condition of their own companies rose 2.8 points to 59.7.

“Survey respondents look forward to better conditions by next spring, in line with most economic forecasts,” said Fred Breimyer, regional economist at the FDIC.

“It is surprising that problems in the global economy – recession or near-recession in Europe and Japan, and slowing growth in China – are not enough to put a damper on these expectations.”

Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC, said gains in the Employment Index and Sales Index for November point to sustained job growth next year.

“Respondents reporting staff additions over past six months outnumber those recording cuts by almost two-to-one (31 percent-17 percent), and the expected ratio in the coming six months is better than three-to-one (32 percent-10 percent),” Winer said.

The November BCI ended just shy of the Index’s post-recession high of 57.1 reached in April 2012.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

Employers continue to be more optimistic about the Massachusetts economy than the national - the U.S. Index of business conditions nationally was off nine-tenths at 49.7, while the Massachusetts Index of conditions within the commonwealth gained 1.8 points to 55.1. Analysts say that gap reflects the view of employers that Governor-Elect Charlie Baker and Democratic legislative leaders will work across party lines far more smoothly that the two parties in Washington.

“There is little indication of concern about having a governor of one party and a legislature controlled by the other,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“On a special survey question, 54 percent of respondents replied that they expect divided government to work better on Beacon Hill than in Washington, and another 28 percent thought it could be productive at both levels.”

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

Employer Confidence Rises As Companies Brighten View of National Economy

Posted by Andre Mayer on Nov 3, 2014 9:00:14 AM

The Associated Industries of Massachusetts Business Confidence Index posted its sixth increase in eight months during October as a brightening view of the national economy helped the index add half a point to 54.9.

BCI.October.2014“The Index is up 8.2 points from last October, which was the month of the federal government shutdown,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“In that context, it is encouraging to see our U.S. Index of national conditions back above 50, up from below 40, and predominantly positive assessments of the business climate from all categories of Massachusetts employers.”   

Torto noted, however, that employers foresee a slight weakening of conditions in the six months ahead.

“There may be some uneasiness about the upcoming elections and the long-expected end of quantitative easing by the Federal Reserve,” he said, “along with concern about the state of the global economy, characterized by fitful growth in the U.S., slowing expansion in China, and Europe on the edge of recession. These generally fall under the heading of uncertainties rather than threats, although Europe’s condition is especially important to Massachusetts because of extensive ties of trade and direct investment.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral. A reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Massachusetts Index, assessing business conditions within the commonwealth, added 2.6 points on the month to 53.3, and the U.S. Index of national business conditions was up 3.6 to 50.6.

“The U.S. Index reached 50 for only the second time since 2007,” remarked BEA member Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, adding that “larger companies were more likely to rate business conditions in Massachusetts better than those prevailing nationally.” Compared to last October, the state indicator was up 8.8 points while its national counterpart gained 12.8 points.

The Current Index, which assesses overall business conditions at the time of the survey, was up 1.8 points at 55.7, while the Future Index, measuring expectations for six months out, shed seven-tenths to 54.2. The annual gains were 9.5 and 6.4 respectively.

“These results indicate a moderate level of satisfaction – short of outright enthusiasm – about current conditions, coupled with a degree of caution about the future course of the economy,” Tyler noted. “Business sentiment has found a firm footing since the series of fiscal crises that peaked a year ago.”  

All three of the sub-indices bearing on survey respondents’ own operations shaded off in October. The Company Index, reflecting overall business conditions, was off 1.1 points to 56.9, the Sales Index lost 1.7 to 57.6, and the Employment Index shed seven-tenths to 54.4.

“Declines in these company-specific indicators may be seen as signs of rising uncertainty,” said Sara L. Johnson, Senior Research Director of Global Economics at IHS Global Insight, a BEA member. “While companies of all sizes were generally positive, large employers were much more confident than small ones about their own situations.”

Confidence was slightly higher in the manufacturing sector (55.2, +4.1) than among other employers (54.7, -3.7), and higher outside Greater Boston (58.2, +5.4) than outside the metropolitan area (53.5, -1.8).

“Manufacturers were more positive about national conditions, and about their own companies’ positions, than other respondents,” Johnson noted.

“Caution about the immediate future was evident in hiring expectations,” she said; only 16% of employers foresaw additional staffing in the coming six months, compared to 33% who added personnel in the prior six months. Staff reductions were at 13% for both periods.  

BCI.October.2014

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Employers: I'm OK, You're Not OK

Posted by Andre Mayer on Oct 7, 2014 9:35:58 AM

I’m OK you’re not OK.

BCI.September.2014That seems to be the mindset of Massachusetts employers who remain confident about the prospects of their own companies, but far less so about the political leadership guiding the Massachusetts and national economies.

The Associated Industries of Massachusetts Business Confidence Index released this morning shows that employer sentiment steadied at 54.4 in September after slipping from 56.9 to 54.2 the previous month. Confidence remains well above its reading in September 2013 and has now increased in each of the first three quarters of 2014.

What stands out in the report, however, is the variation between what employers see inside the walls of their companies and what they see outside those walls.

The Company Index, which measures survey respondents’ confidence in the situations of their own operations, rose 1.5 points in September to 58.0, recouping an August decline. The Employment Index gained a point to 55.1, and the Sales Index added eight-tenths to 59.3.

Meanwhile, the U.S. Index of business conditions prevailing nationally was off 1.8 points at 47.0, and the Massachusetts Index of conditions within the Commonwealth declined 2.0 to 50.7.

“Economic growth has probably decelerated since the second-quarter rebound, but it is possible that these declines reflect political dissatisfaction, concerns about effective leadership and policy,” said Katherine A. Kiel, Professor of Economics at the College of the Holy Cross.

“If actual business conditions were driving the drop, we would expect to see that in the company indicators, which remain strong.”

Adds Michael Goodman, Associate Professor of Public Policy and Director of the Center for Policy Analysis at the University of Massachusetts, Dartmouth, “These are good, solid numbers indicating that the commonwealth’s moderate expansion is continuing.

“Notably, respondents report plans to increase net job creation – 23 percent expect to add staff in the next six months and 11 percent anticipate reducing headcount – which is a very encouraging sign.”

If employers do have concerns about political leadership, the Business Confidence Index suggests they do not expect the November elections to address them. The Current Index, tracking employers’ assessment of existing business conditions, added half a point in September to 53.9, while the Future Index, measuring expectations for the next six months, shed two-tenths to 54.9.

Manufacturers and firms with 25 or fewer employees rated Massachusetts conditions negatively, while other employers were generally positive about the state.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

Richard C. Lord, President and CEO of AIM, said the contrast between lower scores for state and national conditions and higher ratings for company-specific factors underscores the need for political candidates to debate economic issues.

“I believe that employers – and indeed voters generally – would like to see a greater focus in this election cycle on substantive economic issues,” Lord went on.

“In the Massachusetts gubernatorial contest, for example, the candidates themselves are meeting with business leaders and offering economic policy proposals, but media coverage tends to be all about the ‘horserace’ aspect and the candidates’ personal images. Our nation and state face critical real-life economic decisions in the next few years, so we cannot afford to treat the upcoming elections for Congress, constitutional offices, and the legislature as sports events or celebrity showcases.”

Where do the candidates for governor stand on business issues?  Visit AIM's Election 2014 Web page to find out.

Topics: AIM Business Confidence Index, Massachusetts employers, Economy

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