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Business Confidence Weakens Slightly in July

Posted by Christopher Geehern on Aug 1, 2017 9:19:07 AM

Massachusetts employer confidence meandered through the first full month of the summer, edging down during July but remaining well within optimistic territory.

BCI.July.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) shed 0.3 points to 61.5 last month, leaving it 6.4 points higher than a year ago. The Index has gained ground in five of seven months so far in 2017.

The July slip was led by the Employment Index, which dropped 2.4 points from June. Experts on the AIM Board of Economic Advisors believe the slide reflects employers’ inability to hire skilled workers amid a tight labor market rather than a hiring slowdown caused by economic factors.

“Confidence levels at or above 60 signal continued strong confidence among employers in the direction of the state and national economies,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The labor shortage is a serious issue. We hear anecdotes from companies in multiple industries that are turning away business or postponing expansions because they can’t find tech specialists, manufacturing workers or electricians to take the new jobs.”

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 index has remained above 50 since October 2013.

Constituent Indicators  

The constituent indicators that make up the overall Business Confidence Index were mixed during July.

The Massachusetts Index, assessing business conditions within the commonwealth, lost a point to 63.2, still six points higher than in July 2016.

The U.S. Index of national business conditions rose 0.5 points to 57.9 despite lingering uncertainty about federal health-care and economic policy. July marked the 88th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, declined 0.7 points to 61.2 while the Future Index, measuring expectations for six months out, edged up 0.1 point to 61.8. The Future Index ended the month seven points higher than a year ago.

Operational Views

The Company Index, reflecting overall business conditions, lost 0.2 points to 62.2, up 6.3 points during the 12-month period. And though the employment Index dropped to 55.7 the Sales index rose for the third consecutive month, gaining 1.5 points to 64.1.

The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months are similar – 37 percent hiring and only 10 percent downsizing.

Elliot Winer, Chief Economist, Winer Economic Consulting, said workers with the type of skills needed by employers in growing industries remain in short supply, even though Massachusetts has posted significant increases to its labor force so far in 2017.

“Employers report that it is increasingly hard to fill jobs. Job vacancies now significantly exceed new hiring. And yet, wage growth in the state has been near zero when adjusted for inflation,” Winer said.

Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.5 confidence reading in June versus 60.5 for employers in the west.

Manufacturing companies remained optimistic about the economy with the 59.6 confidence reading, but not as optimistic as employers outside the manufacturing sector, who posted a 63.6 result.

Massachusetts Backlash?

AIM President and CEO Richard C. Lord, also a BEA member, noted that employer confidence in the Massachusetts economy has stalled as the state legislature has taken several troubling votes, including one last week to force employers to close a $200 million gap in MassHealth with no long-term reforms to the program.

“Employers are thus left not only to struggle with the rising cost of providing health insurance to their own employees, but to bail out an unsustainable public insurance program as well,” Lord said.

“There are consequences to raising the cost of doing business and declining confidence is a red flag for what may come next.”

Topics: AIM Business Confidence Index, Massachusetts economy

Employer Confidence Strengthens Again

Posted by Christopher Geehern on Jul 5, 2017 10:08:03 AM

Massachusetts employer confidence rose for the ninth time in 10 months during June amid optimism about an economy that is finally attracting more people into the work force.

BCI.June.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 61.8 last month, leaving it 5.7 points higher than a year ago. The Index has gained ground in each of the past two months after slipping in April.

The results come a month after state officials reported a long-awaited expansion of the Massachusetts labor market – the labor-force participation rate rose to 66.7 percent in May, its highest mark since before the Great Recession.

“Employer confidence in both the state and national economies remains well above the level we saw a year ago, especially among manufacturers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Key Massachusetts indicators such as total jobs, wages and gross state product far exceed pre-recession levels and that is outweighing concerns about long-term growth.”

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 index has remained above 50 since October 2013.

The constituent indicators that make up the overall Business Confidence Index were mostly positive during June.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2.1 points to 64.2, leaving it 5.7 points higher than in June 2016.

The U.S. Index of national business conditions rose 2.8 points to 57.4 despite lingering uncertainty about federal economic policy. June marked the 87th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 1.5 points to 61.9 while the Future Index, measuring expectations for six months out, increased 0.4 points to 61.7. The Future Index was 5.1 points higher than a year ago.

The Company Index, reflecting overall business conditions, was unchanged for the month at 62.4 and up 4.7 points during the 12-month period. The Employment Index fell 0.4 points to 58.1 while the Sales index rose 0.6 points to 62.6.
The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 18 percent reduced employment. Expectations for the next six months are stable – 38 percent hiring and only 10 percent downsizing.

Alan Clayton-Matthews, a professor in the School of Public Policy and Urban Affairs at Northeastern University, said the supply of workers remains one of the most important factors in the ability of Massachusetts to maintain long-term economic growth.

“There is little slack left in the labor market. Unemployment rates are back to pre-recession levels, and employment rates are very close to pre-recession levels. The slack that does remain is largely among young workers, those with less than a high-school education, and part-time workers who have been unable to find full-time work, suggesting that many workers lack the skills that employers are seeking,” Clayton-Matthews said.

Overall participation in the labor force nationally has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.
Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.8 confidence reading in June versus 60.8 for employers in the west.

AIM President and CEO Richard C. Lord, also a BEA member, said employers are increasingly concerned about a passel of potentially expensive and disruptive Beacon Hill proposals, including a surtax on incomes more than $1 million, paid family leave and an employer assessment to close a budget gap in the MassHealth program.

“Massachusetts employers have led what is now one of the longest and most consistent economic recoveries of the past 100 years. Much of that growth reflects the fact that policymakers have refrained from unnecessarily raising business costs and imposing inefficient regulation,” Lord said.

“We look forward to working with the Legislature and the Baker administration to ensure that those policies continue.”

Topics: Employers, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Rebounds in May

Posted by Christopher Geehern on Jun 6, 2017 8:29:22 AM

Massachusetts employer confidence resumed its upward trajectory during May as companies expressed renewed optimism about their own business prospects and hiring plans.

BCI.May.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.6 points to 60.8 last month after retreating from a 13-year high in April. The Index has increased in eight of the past nine months and now stands 3.1 points higher than in May 2016.

The May advance was led by strengthening employer confidence in their companies, rather than their overall views of the state and national economies. Manufacturers were particularly bullish, ending May a full 7 points higher than a year earlier.

“We were not surprised to see confidence readings correct slightly in April, and the May results suggest that employers still feel positive about the future,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“In fact, employers seem to have more confidence in their own economic prospects than in the broader economies in which they operate.”

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 index has remained above 50 since October 2013.

The constituent indicators that make up the overall Business Confidence Index were mixed during May.

The Massachusetts Index, assessing business conditions within the commonwealth, lost 1.2 points to 62.1, leaving it a slim 1.8 points higher than in May 2016.

The U.S. Index of national business conditions shed 2.3 points to 57.2, its second consecutive decline. May marked the 86th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 0.5 points to 60.4 while the Future Index, measuring expectations for six months out, increased 0.8 points to 61.3. The Future Index was 3.2 points higher than a year ago.

The Company Index, reflecting overall business conditions, gained 2.2 points for the month and 3.2 points for the 12-month period to 60.2. The Employment Index rose 2.3 points to 58.5, and the Sales Index was up 1.5 points to 62.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months are more optimistic – 38 percent hiring and only 10 percent downsizing.

Sara L. Johnson, Senior Research Director, Global Economics, IHS Markit, and a BEA member, said it is encouraging that employers are looking at their own balance sheets and feeling confident enough to anticipate stepped-up hiring.

“The overall AIM Index continues to move in a range that suggests solid optimism among employers, both in the current time frame and six months into the future. As optimism turns to hiring, the tight labor market is likely to put upward pressure on wages,” Johnson said.

The changing dynamics of the labor market were underscored last week when the government issued a jobs report that reflected a decline in the share of working-age adults who have a job or are in the market for one. Overall participation in the labor force has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.

For the second time in three months, Western Massachusetts companies were more confident in May than those in the eastern portion of the commonwealth. Western Massachusetts employers posted a 61.2 confidence reading in May versus 60.9 for employers in the western part of the state.

AIM President and CEO Richard C. Lord, also a BEA member, said employers appear to be drawing encouragement from within rather than looking for clues amid the chaotic and often contradictory signals of the overall economy and political debate.

“Employers, like everyone else, are still trying to digest the economic implications of the United States pulling out of the climate-change accord. They are also trying to balance the promise of meaningful federal tax reform with concern about renegotiated trade agreements and Medicaid changes that could blow a $2 billion hole in the state budget,” Lord aid.

“Amid all those factors, the potential acceleration of hiring speaks to the resiliency of Massachusetts employers and the global pre-eminence of their products and services.”

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

Business Confidence Retreats After Seven-Month Rally

Posted by Christopher Geehern on May 2, 2017 9:46:20 AM

Massachusetts employers hit the pause button on a seven-month rally in business confidence during April, but their outlook remained solidly optimistic in the face of mixed political and economic signals.

BCI.April.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) lost 2.2 points to 60.2 last month, 4.0 points higher than its level of a year earlier. Every constituent element of the confidence index lost ground after reaching a 13-year high during March.

The results came as the Massachusetts economy contracted at a 0.5 percent annual rate during the first quarter and the state unemployment rate rose to 3.6 percent.

“We should not be surprised to see confidence readings correct slightly after advancing six points since September,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“It bears watching to determine whether the broad April decline becomes a trend as we move into the summer.”

Analysts believe the numbers may reflect growing concern among employers about the ability of the Trump Administration to deliver the many pro-growth policies it promised during the campaign.

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 index has remained above 50 since October 2013.

Employers grew less confident about both the overall economy and their own operations during April.

The Massachusetts Index, assessing business conditions within the commonwealth, lost 0.4 points to 63.3, leaving it 6 points higher than in April 2016.

The U.S. Index of national business conditions shed 2.7 points after gaining ground for the previous sixth months. April marked the 85th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, declined 1.9 points to 59.9 while the Future Index, measuring expectations for six months out, dropped 2.5 points to 60.5. The future outlook remained 3.2 points higher than a year ago.

The Company Index, reflecting overall business conditions, fell 2.6 points to 60.2. The Employment Index fell 2.8 points to 56.2, and the Sales Index declined 2.1 points to 60.5.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

Barry Bluestone, Stearns Trustee Professor of Political Economy at Northeastern University and a BEA member, noted that the Massachusetts economy is running up against tightness in the labor market that makes it difficult for employers to grow.

“The combination of a prolonged economic recovery and the demographics of skilled workers retiring with no one to replace them is creating an impediment to growth for Massachusetts employers. The shortage underscores once again the importance of creating an education and training system that responds to the demands of the economy,” Bluestone said.

The April survey also reversed an unusual result in March when Western Massachusetts companies were more confident than those in the eastern portion of the commonwealth. Eastern Massachusetts employers posted a 61.7 confidence reading in April versus 58 for employers in the western part of the state.

AIM President and CEO Richard C. Lord, also a BEA member, said employer confidence is also facing headwinds from accelerating health-care and health-insurance costs. Massachusetts has exceeded its objective for health-care spending in each of the past two years and employers continue to pay some of the highest costs in the nation.

“The good news is that Massachusetts is beginning to identify some answers. And there appears to be enough common ground and political will on the issue to pursue some solutions,” Lord said.

“New research conducted by the Massachusetts Health Policy Commission suggests that Massachusetts employers, insurers and policymakers could reduce total health-care expenditures anywhere from $279 million per year to $794 million per year, or 0.5 to 1.3 percent, by making several key improvements to the health-care system.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Employer Confidence Rises Again in March

Posted by Christopher Geehern on Apr 4, 2017 8:47:09 AM

Massachusetts employer confidence inched higher during March amid a swirl of contradictory economic and political signals.

BCI.March.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) increased 0.3 points to 62.4 last month, 5.9 points higher than its level of a year earlier and the highest reading since August 2004. The seventh consecutive monthly improvement reflected an increase in the U.S. Index of national business conditions, which has risen 9.1 points during the previous year, and a bullish overall view of current conditions.

The results came as the government announced that the U.S. economy grew in the fourth quarter at a faster pace than previously reported on higher consumer spending. At the same time, the Massachusetts unemployment rate rose to 3.4 percent as employers created jobs at an annual pace of 57,700.

“Massachusetts employers remain broadly confident about both the state and national economies,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer at the Harvard Graduate School of Design.

“Slight declines in the Employment Index, the Manufacturing Index and projections about the economy six months from now perhaps reflect some of the uncertainty about the direction of economic policy in Washington.”

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 index has remained above 50 since October 2013.

The sub-indices based on selected questions or categories of employer were mixed during March.

The Massachusetts Index, assessing business conditions within the commonwealth, rose 0.5 points to 63.7, leaving it 6.2 points higher than in March 2016.

The U.S. Index of national business conditions gained ground for the sixth consecutive month. Views of the national economy rose one point to 59.9. Still, February marked the 83rd consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, surged 1.9 points to 61.8 while the Future Index, measuring expectations for six months out, lost 1.4 points to 63.0. The future outlook was 4.9 points higher than a year ago.

The sub-indices bearing on survey respondents’ own operations were also ambiguous.

The Company Index, reflecting overall business conditions, remained unchanged from February at 62.8. The Employment Index fell 1.4 points to 60.4, but the Sales Index gained 1.1 points to 62.6.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

One of the most unusual results of the March survey was that Western Massachusetts companies were more confident (63.6) than those in the eastern portion of the commonwealth (62.2). Confidence outside of the white-hot Boston economy has been increasing steadily for months, but experts say it is too soon to say whether the geographic shift represents a long-term trend or a statistical anomaly.

Paul Bolger, President, Massachusetts Capital Resource Company, and a BEA member, noted that the March confidence survey was taken just as Republican efforts to repeal federal health reform fell apart.

“Employers have anticipated that a Republican Congress and a Republican president would deliver traditional pro-growth measures such as tax reform and infrastructure improvements. The failure of those parties to pass health-reform legislation seems to have created uncertainty about other legislative priorities that matter to employers,” Bolger said.

AIM President and CEO Richard C. Lord, also a BEA member, echoed the sense of uncertainty that hangs over Massachusetts as federal policymakers in Washington struggle to establish a direction.

“Many growth industries in Massachusetts such as health care, higher education, research and defense, depend upon federal funding and are vulnerable to potential budget reductions,” Lord said.

“Discussion of transitioning Medicaid, the health-insurance program for low-income Americans, to block grants also has significant implications to the health care system that is already straining employers.”

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Employer Confidence Hits 13-Year High

Posted by Christopher Geehern on Mar 7, 2017 8:45:12 AM

Confidence among Massachusetts employers hit a 13-year high during February, fueled by optimism among manufacturers and an increasingly positive view of the national economy.

BCI.February.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.7 points to 62.1 last month, seven points higher than its level of a year earlier and the highest reading since August 2004. Driving the increase was the U.S. Index of national business conditions, which has risen 11.5 points during the past year, and the Manufacturing Index, which surged 9.1 points.

The results came amid increasingly mixed economic signals that included a 2.8 percent Massachusetts unemployment rate and a significant slowdown in economic growth both in Massachusetts and nationally during the fourth quarter.

“The increase in confidence was more modest than we have seen in previous months. Employers projected a generally positive view of the economy, but were also taking the measure of potential economic policy changes in Washington,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Employers remain more optimistic about the future than about the present - a good indicator of the potential for continued growth and investment both in Massachusetts and nationally.”

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 index has remained above 50 since October 2013.

Almost all of the sub-indices based on selected questions or categories of employer were up during February.
The notable exception was the Massachusetts Index, assessing business conditions within the commonwealth, which declined 0.2 points to 63.2. The state index nevertheless remained 6.8 points higher than in February 2016.

Meanwhile, the U.S. Index of national business conditions gained ground for the fifth consecutive month. Employers appear encouraged by the possibility that Congress and the new administration will pass growth measures that could include tax and regulatory reform.

February marked the 82nd consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, increased 0.5 points to 59.9 while the Future Index, measuring expectations for six months out, rose 1.1 points to 64.4. The future outlook was 8.5 points better than a year ago and higher than at any point since May of 2004.

The sub-indices bearing on survey respondents’ own operations were mixed.

The Company Index, reflecting overall business conditions, rose 0.9 points to 62.8 while the Employment Index gained two points to 60.4. The Sales Index lost 0.4 points to 62.6.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

Michael Tyler, Chief Investment Officer, Eastern Bank Wealth Management, and a BEA member, noted that the traditional confidence gaps between manufacturing companies and non-manufacturers, and between companies located in the eastern and western portions of Massachusetts, have closed in recent months.

“Confidence among Massachusetts manufacturers has risen 9.1 points during the past year and now stands at 61.2 compared to 63.0 for non-manufacturers. And confidence among companies in western and central Massachusetts hit 61.8 in February compared to 62.6 for companies in the eastern part of the state,” Tyler said.

"Those results suggest that the benefits of economic growth are finally spreading from Greater Boston to the entire state. What's more, as the dollar's rise has stabilized, manufacturers are finally sharing the positive view that service sector employers have felt for several years."

AIM President and CEO Richard C. Lord, also a BEA member, said the 2.8 percent unemployment rate in Massachusetts and the commonwealth’s designation last week as the best state in the nation by US News and World Report underscore the fact the Bay State economy remains strong.

At the same time, Lord said, employers face an uncertain mix of policy initiatives in Washington.

“Employers are certainly enthusiastic about lower corporate taxes, streamlined regulation and a meaningful infrastructure program. They are not as enthusiastic about withdrawing from trade agreements and once again having to process major changes in health reform,” he said.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Employer Confidence Rises for Fifth Consecutive Month

Posted by Christopher Geehern on Feb 7, 2017 8:42:41 AM

Confidence among Massachusetts employers rose for the fifth consecutive month during January despite a marked slowdown in economic growth during the fourth quarter of 2016.

BCI.January.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 61.4 last month, a full 5.6 points higher than a year earlier and the highest reading since December 2004. The confidence increase came during a month when the Massachusetts unemployment rate fell to 2.8 percent and Bay State employers created more than 72,000 new jobs for the year.

At the same time, national economic growth slowed to an annual rate of 1.9 percent during the final three months of 2016, while the Massachusetts economy downshifted to a 0.5 percent growth rate from 3.1 percent during the third quarter.

“The good news is that unemployment in Massachusetts remains well below the national rate of 4.7 percent, but that low jobless rate may also be creating labor-force capacity constraints that are slowing output,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Employer confidence seems to be tracking the overall optimism of financial markets that continue to hit record highs. It will be instructive to see how that enthusiasm holds up as Congress and the new administration get down to the business of governing.”

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 index has remained above 50 since October 2013.

Constituent Indicators Uniformly Higher

All of the sub-indices based on selected questions or categories of employer were up to start 2017.

The Massachusetts Index, assessing business conditions within the commonwealth, rose to 61.8, leaving it 5.2 points ahead of the same time last year.

The U.S. Index of national business conditions inched up 0.1 points to 57.6 - 7.5 points higher than in January 2016. January marked the 81st consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, increased 0.3 points to 59.4 while the Future Index, measuring expectations for six months out, rose 1.6 points to 63.3. The future outlook was 6.1 points better than a year ago and higher than at any point since March 2015.

Operational Views Strengthen

The sub-indices bearing on survey respondents’ own operations also strengthened.

The Company Index, reflecting overall business conditions, rose one point to 61.9 while the Employment Index gained 1.2 points to 58.4 and the Sales Index 0.7 points to 62.1.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 18 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

“One of the elements driving the overall increase in employer confidence is a rapidly brightening outlook among manufacturers,” said Katherine A. Kiel, Ph.D., Professor of Economics, College of the Holy Cross in Worcester and a BEA member.

“The AIM Manufacturing Index has risen 8.5 points during the past five months, driven by a positive outlook on sales and hiring. Manufacturing optimism also bodes well for capital investment and research and development going forward.”

Companies in the eastern part of the Massachusetts were more optimistic at 63.0 than those in the western part of the state at 59.0.

AIM President and CEO Richard C. Lord, also a BEA member, said the emerging labor-force constraints underscore the importance of maintaining a world-class training and education system in Massachusetts. He noted that in the area of manufacturing, AIM has filed legislation to provide a 50 percent tax credit for eligible expenses for employees who receive certification through the Massachusetts Manufacturing Advancement Center Workforce Innovation Collaborative’ s (MACWIC) Applied Manufacturing Technology Pathway Certification Program.

“As employers find it increasingly difficult to locate appropriately skilled employees, we are reminded that our economic future depends upon the ability of Massachusetts to educate all children and all incumbent workers with the knowledge our companies need to prosper in a complex global economy,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Business Confidence Hits 12-Year High

Posted by Christopher Geehern on Jan 3, 2017 7:30:00 AM

Confidence among Massachusetts employers hit its highest level in 12 years during December amid the prospect of growth initiatives from the new administration in Washington and a continued strong state economy.

BCI.December.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.3 points to 60.4 last month, a full 5.1 points higher than its level in December 2015 and the highest reading since December 2004. It marked the fourth consecutive monthly increase in sentiment among employers in a commonwealth where the unemployment rate recently fell to 2.9 percent.

The November and December BCI readings mirror the post-election rally in U.S. financial markets, which have risen five percent as President-Elect Donald Trump prepares to work with a Republican Congress on business-friendly issues as tax reductions, regulatory reform and infrastructure spending. The AIM survey showed a 5.5-point jump in confidence in the national economy last month, leaving that indicator at its highest level since 2007.

“Massachusetts employers are taking the president-elect at his word that he will prioritize economic growth at the national level, especially if he is able to work with Congressional Democrats on a $1 trillion infrastructure initiative,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“But employer enthusiasm is also based upon a solid economic expansion during 2016 that most analysts believe will continue in a methodical manner though the first half of 2017.”

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 index has remained above 50 since October 2013.

Constituent Indicators Mostly Higher

Almost all of the sub-indices based on selected questions or categories of employer were up in December.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2 points to 61.8, leaving it 5.5 points ahead of the same time last year.

The increase in the U.S. Index of national business conditions put that figure 7.5 points higher than its level of a year ago, but still short of the Massachusetts index. It marked the 80th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, increased 2.2 points to 59.1 while the Future Index, measuring expectations for six months out, rose 2.5 points to 61.7. The future outlook was 5.5 points better than a year ago and higher than at any point since March 2015.

Operational Views Strengthen

The sub-indices bearing on survey respondents’ own operations also strengthened considerably.

The Company Index, reflecting overall business conditions, rose 1.4 points to 60.9 while the Sales Index increased 3.2 points to 61.4. The Employment Index was the only indicator to lose ground, falling 0.2 points to 57.2.

The AIM survey found that nearly 38 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

“One of the most positive results of the December survey is that business confidence is strengthening uniformly across almost every sector of the economy,” said Elliot Winer, Chief Economist, Winer Economic Consulting and a BEA member.

“Employers both large and small, manufacturers and non-manufacturers, from the Pioneer Valley to Great Boston are more optimistic about their prospects than at any time since prior to the Great Recession.”

The BCI Manufacturing Index jumped 0.6 points during the month and 2.6 points for the year. The overall Business Confidence Index among non-manufacturers was 63.3 compared to 56.7 for manufacturing companies.

Companies in the eastern part of the Massachusetts were slightly more optimistic at 61.4 than those in the western part of the state at 57.6.

AIM President and CEO Richard C. Lord, also a BEA member, said employers appear to be encouraged by the prospect that President-Elect Donald Trump and a Republican Congress will be able to pass their tax and regulatory agenda.

At the same time, Lord said, there remains uncertainty about a possible repeal of federal health Care reform and the future of international trade agreements that are critical to Massachusetts companies.

“The only certainty appears to be uncertainty for the next six months,” Lord said.

“The key will be to ensure that any tax reductions and regulatory reforms made on the national level are not obviated by state measures intended to make Massachusetts a progressive ‘model’ for the rest of the country.”

Topics: AIM Business Confidence Index, Massachusetts economy, Donald Trump

Employer Confidence Surges

Posted by Christopher Geehern on Dec 6, 2016 9:18:57 AM

Employer confidence in Massachusetts surged during November amid a post-election economic rally that saw financial markets rise to record levels and the state unemployment rate drop to 3.3 percent.

BCI.November.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 1.9 points to 58.1 last month, 1.2 points higher than its level in November 2015. The third consecutive monthly increase in employer sentiment reflected across-the-board bullishness about the state and federal economies, along with a strong recovery of confidence among Massachusetts manufacturers.

U.S. financial markets rose three percent to record highs in the weeks following the unexpected election of Donald J. Trump as president. In Massachusetts, meanwhile, the news was even better as the jobless rate fell to its lowest level since April 2001.

“Employers and investors alike put aside their initial concerns about a Trump presidency and decided that the president-elect would prioritize conventional economic growth measures such as infrastructure investment and tax cuts,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“How long will that confidence last? It may depend upon President Trump’s commitment to following through on issues that employers are less likely to support, such as setting aside the Trans Pacific Partnership trade agreement and dismantling federal health-care reform.”

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 index has remained above 50 since October 2013.

All of the sub-indices based on selected questions or categories of employer were up in November.
The Massachusetts Index, assessing business conditions within the commonwealth, gained 1.9 points to 59.8, leaving it a healthy 1.5 points ahead of the same time last year. The U.S. Index of national business conditions rose 2.8 points to move into optimistic territory for the first time since July.

Employers have been more optimistic about the Massachusetts economy than about the national economy for 79 consecutive months.

The Current Index, which assesses overall business conditions at the time of the survey, increased 0.9 points to 56.9 while the Future Index, measuring expectations for six months out, surged 2.9 points to 59.2. The future outlook was 1.2 points better than a year ago and higher than at any point since March 2015.

The sub-indices bearing on survey respondents’ own operations also strengthened considerably.

The Company Index, reflecting overall business conditions, rose 1.6 points to 59.5, while the Employment Index moved up 2 points to 57.4 and the Sales Index gained 2.7 points.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.

“The most encouraging element of the November BCI is the degree to which employers are translating their overall optimism about the economy into optimism about their own plans for sales growth and hiring,” said Alan Clayton-Matthews, Professor of Public Policy and Urban Affairs at Northeastern University and a BEA member.

He noted that manufacturing companies are driving much of the overall rise in business confidence after several years of concern about weakness in overseas export markets in Europe and Asia.

“Optimistic manufacturers are good for the Massachusetts economy,” Clayton-Matthews said.

The BCI Manufacturing Index jumped 2.6 points during the month and 4.1 points for the year. Still, the overall Business Confidence Index among non-manufacturers was 60.1 compared to 56.1 for manufacturing companies.
Companies in the eastern part of the Massachusetts were slightly more optimistic at 59.2 than those in the western part of the state at 57.4.

AIM’s President and CEO Richard C. Lord, also a BEA member, said the surprise election of a president with no record in public office upon which to make judgments will make 2017 an uncertain time for Massachusetts employers and the state economy.

“Will President Trump and the Republican Congress succeed in reducing corporate taxes? Will they keep their promise to simplify the regulatory structure? What will the potential scrapping of health-care reform mean to Massachusetts? And will the new president follow through on his intent to end or renegotiate trade agreements important to employers? That’s a lot of uncertainty,” Lord said.

“The good news is that Massachusetts remains one of the strongest state economies in the nation thanks to years of sound fiscal management and attention by elected officials to the needs of employers. We have every expectation that Governor Baker and the Legislature will follow the same course in 2017-2018.”

Topics: AIM Business Confidence Index, Massachusetts economy, Donald Trump

Employer Confidence Rebounds in September

Posted by Christopher Geehern on Oct 4, 2016 9:17:07 AM

Business confidence broke a three-month slide during September as Massachusetts employers, particularly in the service sector, discovered newfound optimism in their own business operations.

BCI.September.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 1.8 points to 55.9 last month, the same level recorded 12 months earlier. The increase was driven by a 3.1-point surge in the Company Index, which reflects overall business conditions at employer companies, and similar jumps in readings based on employment and sales.

The uptick came as the Federal Reserve continued to suggest that the economy is strong enough to raise interest rates before the end of the year.

“Employers remain ambivalent about both the U.S. and national economies ahead of the presidential election, but companies clearly have regained a sense of buoyancy about their own futures,” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management and a member of AIM's Board of Economic Advisors (BEA).

“Large increases in the sales and employment indexes bode well for a Massachusetts economy that already enjoys a 3.9 percent unemployment rate.”

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 index has remained above 50 since October 2013.

Constituent Indicators Mixed

The sub-indices based on selected questions or categories of employer were mixed during September.

The Massachusetts Index, assessing business conditions within the commonwealth, shed 0.3 points during the month, but gained 2.3 points over the year to 57.0. The U.S. Index of national business conditions remained slightly pessimistic, dropping 0.4 points to 49.2, 1.4 points lower than its level of a year ago.

Employers have been more optimistic about the Massachusetts economy than about the national economy for 77 consecutive months.

The Current Index, which assesses overall business conditions at the time of the survey, increased 2.3 points to 55.7 while the Future Index, measuring expectations for six months out, rose 1.1 points to 56.0. The future view is a point higher than it was in September 2015.

Operational Views Strengthen

The 3.1-point increase in the Company Index reflected a surge of 3.8 points in the Sales Index to 58.1 and a 1.9-point jump in the Employment Index to 54.5. The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 38 percent hiring and only 10 percent downsizing.

Non-manufacturing companies maintain a significantly brighter outlook than manufacturers. The overall Business Confidence Index among non-manufacturers was 61.1 compared to 50.9 for manufacturing companies.

“The uptick in employer assessments of their own prospects comes as welcome news following three consecutive months of declines. At the same time, manufacturers continue to struggle with economic weakness in key export markets,” said Paul Bolger, President, Massachusetts Capital Resource Company and a BEA member.

The Economy and the Election

AIM’s President and CEO Richard C. Lord, also a BEA member, said the 2016 presidential election has become a referendum on the degree to which the economic recovery is benefitting middle-income Americans.

“Peter Canellos, Executive Editor of Politico, told the AIM Executive Forum on September 16 that the legacy of the 2016 campaign will be an ongoing debate about the economic future of blue-collar, middle-class workers who have not felt the benefits of the recovery. It is incumbent upon all of us to create an economic that encourages the development of jobs across all sectors to train people effectively for those jobs,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

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