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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 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

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

Politico Editor: 2016 Election Highlights Blue-Collar Concerns

Posted by Christopher Geehern on Sep 16, 2016 2:18:05 PM

Donald Trump has more social-media followers than the number of votes normally needed to be elected president of the United States.


It’s a statistic that Peter Canellos, Managing Editor of Politico, says helps to explain why the media coverage of the 2016 presidential election, and the election itself, is different from any other in history.

“These changes are themselves a major factor in the 2016 presidential campaign,” Canellos told more than 250 business leaders at the AIM Executive Forum this morning.

“We can’t establish the political dialog, as we did in the past, but we cannot ignore it.”

Recalling his work covering the 2002 presidential race when he was often the only reporter present when Bill Clinton and other candidates spoke, Canellos said that every word a candidate says today is recorded on a dozen iPhones, often held by representatives of the opposing campaigns, and posted online before any formal media outlet can post the story.

“Even if a news organization tries to exercise restraint, or tries to make decision about the news, the conversation is already galloping ahead without them,” said Canellos, who spent 26 years at the The Boston Globe before moving to Politico.

He acknowledged that many people were uncomfortable with the degree of control that “media mandarins” from The New York Times and other establishment publications once exerted over the narrative of presidential campaigns. The new reality of social media, he said, has recast the role of reporters to one of monitoring the veracity of campaign statements, tracking the connection between money and politics and looking at some of the issues “that candidates seek to avoid.”

Canellos believes the two major political parties will survive an election with two relatively unpopular nominees, but that each will change significantly.

“If you look at the history of the country the two parties’ positions have shifted dramatically. Who would have thought that the Democrats would be the party of Wall Street now? And the migration of working- class blue-collar voters to the Republican party seems to have accelerated strongly with the Trump nomination.”

The Democrats, according to Canellos, will have to sort out whether their future lies with the insurgent wing represented by Senators Bernie Sanders and Elizabeth Warren, or the establishment block led by Hillary Clinton.

“On the Republican side there will be quite an identity crisis. Even if Trump is elected, there will be questions within the Republican party about who they should be and what they should be,” he said.

Canellos said that early predictions that Democrats would regain control of the U.S. Senate appear to have been premature. Control of the Senate is now “a 50-50 proposition” as senators such as John McCain who trailed badly in the polls during the summer appear to be making up ground.

He believes the long-term legacy of the 2016 presidential election will be a sustained debate over the plight of middle-class workers, especially in traditional manufacturing areas now struggling to find new ways to grow.

“Trump has played   a role in putting that constituency front and center...Even some of the Democratic proposals like free college tuition and retraining through community colleges are responding to that constituency."

Topics: Economy, AIM Executive Forum, Policy

AIM Honors GE, Nuance Communications and Dr. Ann McKee with Inaugural Vision Awards

Posted by Christopher Geehern on Apr 25, 2016 7:30:00 AM

Two companies that have transformed the Massachusetts economy and a distinguished brain researcher who has changed the manner in which Americans view sports injuries have been named inaugural recipients of the Vision Award from Associated Industries of Massachusetts.

General Electric of Boston, Nuance Communications of Burlington and Boston University brain researcher Dr. Ann McKee will receive the honors during AIM’s 2016 annual meeting May 13 at the Westin Boston Waterfront hotel.

The Vision Award recognizes companies, organizations and individuals who have made unique contributions to the cause of economic opportunity in Massachusetts and the well-being of the people who live here. The award reflects AIM’s mission to stand for jobs, economic opportunity, innovation and a government that acknowledges that the private sector has the unique responsibility to create the common wealth for the people of Massachusetts.

“The 4,500 member employers of Associated Industries of Massachusetts are delighted to honor two companies and one individual who have truly changed the way we live,” said AIM President and Chief Executive Officer Richard C. Lord.

“GE has redefined the way we view Massachusetts. Nuance has shaped the way we interact with technology. And Dr. Ann McKee has outlined an entirely new set of assumptions for athletic safety from the professional level to youth leagues.”

GeneralElectric2.jpgGeneral Electric, a founding member of AIM in 1915, altered the economic development landscape of Massachusetts when it announced in January that it would relocate its corporate headquarters to the Seaport in South Boston. GE will bring roughly 800 jobs to Boston and create a GE Digital Foundry for co-development, incubation and product development with customers, startups and partners.

The company already has a significant presence in Massachusetts, with nearly 5,000 employees across the state in businesses including Aviation, Healthcare, Oil and Gas and Energy Management. In 2014, GE moved its Life Sciences headquarters to Marlborough, and in 2015 announced its energy services start-up, Current, would also be headquartered in Boston.

CEO Jeffrey Immelt explained the move to Boston: “Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations… Massachusetts spends more on research and development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world.”

Nuance.jpgNuance Communications is a global pioneer in voice-recognition and imaging software that bridges the gap between humans and the technology they create. 

The $2 billion-a-year company is best known for providing the voice recognition technology that underpins many digital personal assistants, including Apple’s Siri, Samsung’s S-Voice and Ford’s Sync. 

But Nuance’s largest business segment is providing software that allows healthcare professionals to dictate and capture patient information that streamlines electronic medical records.  Today, more than 500,000 medical professionals use Nuance's products in some capacity.

Nuance employs 14,000 people – with more than 1,000 in Massachusetts – and maintains regional offices in 35 countries. Its international headquarters is located in Dublin.

The company describes its work this way: “Technology should work in service of people, and adapt to the way people communicate instead of forcing people to adapt to the machines.

“We are pioneers in making technology fluent in all things human: from understanding spoken words and extracting their meaning to adaptively and seamlessly interpreting the swipe of a fingertip…And we continuously evolve the ability to perceive the nuance of words, actions and meaning – to fit into your life, your business and your world.”

Mckee.jpgDr. Ann McKee has brought the issue of chronic brain trauma and its effect on athletes and members of the military into the forefront of American consciousness. Her research establishing a link between repetitive head impacts and chronic traumatic encephalopathy (CTE) in former professional football players prompted the National Football League to acknowledge in March a connection between the sport and degenerative brain disorders.

The league’s admission came at a Congressional hearing just moments after Dr. McKee had presented findings showing that dozens of former players who had died were afflicted with the disease. The NFL reached a $765 million settlement in 2015 over concussion-related brain injuries among its 18,000 retired players.

Dr. McKee’s research is also influencing youth sports. PopWarner, the world’s largest youth football league, made rule changes in 2012 to begin limiting contact during practices “in light of developing concussion research.”

Dr. McKee serves as chief of neuropathy for the Veterans Administration, Boston Health Care System. She directs the CTE Center and Brain Banks for the Boston University Alzheimer’s Disease Center and Framingham Heart Study. She is also professor of Neurology and Pathology at Boston University School of Medicine.

The AIM Annual Meeting is expected to draw some 750 senior business leaders form throughout Massachusetts. The event will feature a keynote address by Massachusetts House Speaker Robert DeLeo and presentation of the annual John Gould Education and Workforce Development Award.

 

Register for the 2016 AIM Annual Meeting

Topics: AIM Annual Meeting, Economy, AIM Vision Award

Employer Confidence Weakens in February

Posted by Christopher Geehern on Mar 1, 2016 11:16:49 AM

Confidence among Massachusetts employers weakened for the fifth time in seven months during February, but businesses remain optimistic overall about the ability of the Massachusetts economy to ride out uncertainty abroad and an increasingly curious election season in the United States.

BCI.February.2016.jpgThe Associated Industries of Massachusetts (AIM) Business Confidence Index shed 0.7 points to 55.1 last month, still comfortably above the 50 mark that denotes a positive economic outlook.

However, the reading was 4.7 points below its level of a year earlier, weighed down by growing concern about the slowing U.S. economy. That concern was confirmed Friday when the government said U.S. economic growth slowed to 1 percent during the fourth quarter of 2015.

“We’re seeing some ambivalence among employers as they look at the economy, especially the turmoil in some overseas markets, but all within the range of general optimism about 2016,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Ambivalence indeed seems to define most views of the US economy, as we saw last week when the annual Economic Report of the President noted the strong rebound since 2008 while acknowledging that economic forces, including the rapid pace of technological change, are weighing on American industry.”

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.

National, State Indicators Decline

Virtually all of the sub-indices based on selected questions or categories of employer declined during February and dropped significantly from their levels of February 2015.

The Massachusetts Index, assessing business conditions within the commonwealth, slid 1.7 points to 56.4 in February, down 3.4 points from the year earlier. The U.S. Index of national business conditions remained in negative territory, declining by 2.5 points to 47.4 for the month and by almost eight points during the past year.

The Current Index, which assesses overall business conditions at the time of the survey, dropped by 0.3 points, while the Future Index, measuring expectations for six months out, declined 1.1 points to 55.9.

"Employer views of current conditions and future prospects are almost identical, unlike a year ago when companies were more upbeat looking forward. The February 2016 survey reflects an environment of global uncertainty, characterized by financial market volatility, weakening corporate earnings, and rising credit risk,” said Sara L. Johnson, Senior Research Director, Global Economics, IHS Global Insight and a BEA member.

Operational Views Strengthen

The three sub-indices bearing on survey respondents’ own operations strengthened in February.

The Company Index, reflecting overall business conditions, rose 0.3 points to 57.3, while the Sales Index surged a full point to 58.1. The Employment Index declined slightly by 0.2 points to 54.7.

“Companies feel pretty good when they look at their own prospects and hiring plans,” said Barry Bluestone, Professor of Political Economy at Northeastern University.

The survey found that 38.8 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were even stronger – 37 percent hiring and only 10 percent downsizing.

“Once you get past the immediate economic issues, the real story of the Massachusetts economy will be the ability of these growing employers to find people with the skills and education needed for the high-value jobs that are being created,” Bluestone said.

Confidence levels in February were higher in Greater Boston (52.5) than in the rest of the commonwealth (49.4). Employers in the manufacturing sector continued to be less positive (52.1, -1.7) than other employers (58.3, -0.1).
Employers of all sizes recorded positive confidence levels, with the mid-size group lagging behind both larger and smaller companies.

Government Actions Key to Business Climate

AIM’s President and CEO Richard C. Lord, a BEA member, said the February Index underscores both the underlying resilience of the Massachusetts economy and the persistent challenge of ensuring that economic growth benefits all areas of the state.

Noting the difference in confidence levels inside the Boston/Cambridge technology corridor and the rest of the state, Lord said, “How do we as a ‘common wealth’ address the widening imbalance between the economically thriving economy of Greater Boston and the more traditional economy that dominates the commonwealth from Route 495 to Berkshire County?

“The economy outside Boston depends for its growth upon an industry mix that is far more affected by the high cost structure and heavy regulatory tradition of Massachusetts. That is why it is so important for Beacon Hill lawmakers to be vigilant about controlling the costs of energy, health care and other factors that drive job creation.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Employers Remain Optimistic, Despite Market Volatility

Posted by Christopher Geehern on Feb 2, 2016 9:38:18 AM

Confidence among Massachusetts employers remained steady during January as optimism about the state economy offset uncertainty about China and turbulent financial markets.

BCI.January.2016.jpgThe Associated Industries of Massachusetts (AIM) Business Confidence Index rose 0.5 points to 55.8 last month, starting 2016 well above the 50 mark that denotes a positive economic outlook. The increase was driven by a 1.8-point surge in the index measuring employer attitudes about Massachusetts.

Confidence remained lower than it was in January 2015.

“The fact that employer confidence remained solid during a month in which the Standard & Poor’s 500 Index was at one point off 9 percent and oil dropped below $27 a barrel points to the fundamental, underlying strength of the Massachusetts economy,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The Massachusetts Index has been above its national counterpart for 80 consecutive months, and that perception was bolstered by the decision in January by General Electric to locate its corporate headquarters in Boston. GE’s decision was important, not only for the 800 jobs it will bring, but because the company cited Massachusetts’ leadership in knowledge industries as its reason for coming.”

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 ended 2015 down for the year, but remained consistently in optimistic territory for the first 12-month period since the Great Recession.

State Indicator Leads National Counterpart

Most of the sub-indices based on selected questions or categories of employer rose a point or two in January, though all remained down year-over-year.

The Massachusetts Index, assessing business conditions within the commonwealth, jumped 1.8 points to 58.1, starting the year more than a point lower than last January. The U.S. Index of national business conditions slipped to 49.9 on the month, leaving it more than four points lower than a year ago.

The Current Index, which assesses overall business conditions at the time of the survey, increased slightly to 54.6, while the Future Index, measuring expectations for six months out, rose almost a full point to 57.0.

“Employers clearly do not believe that the correction in financial markets signals an overall economic slowdown,” said Alan Clayton-Matthews, Associated Professor of Economics and Public Policy at Northeastern University and a BEA member.

“Massachusetts employers foresee positive business conditions through at least the first half of 2016, and that comports with economic forecasts that Massachusetts will reach full employment during the year.”

Employment Strengthening in 2016

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

The Company Index, reflecting overall business conditions, was up 0.3 points at 57.0; the Sales Index shed 1.1 points to 57.1; and the Employment Index rose 1.3 points to 55.1.

“The increase in the Employment Index is good news for Massachusetts. Our survey found that 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment,” said Katherine A. Kiel, Professor of Economics, College of the Holy Cross, another BEA member.

“Expectations for the next six months were even stronger – 37 percent hiring and only 10 percent downsizing.”

Confidence levels in December were similar outside Greater Boston (56.3, +0.3) and within the metropolitan region (56.6, +1.4). Employers in the manufacturing sector continued to be less positive (53.8, -0.3) than other employers (58.4, +1.2).

“Manufacturing is the sector where uncertainty about China and other foreign markets becomes most apparent, though manufacturers remain generally sanguine about the next six months,” Kiel said.

Employers of all sizes recorded positive confidence levels, with the mid-size group lagging behind both larger and smaller companies.

AIM’s President and CEO Richard C. Lord, a BEA member, said the positive economic climate that persuaded General Electric to locate in Massachusetts must be preserved going forward.

“GE’s decision to leave Connecticut underscored the fact that taxes and the business environment matter a great deal to companies in their location decisions,” said Lord, who once worked for GE.

“We look forward to working with the Legislature to ensure that employers all over the commonwealth are able to do what they do best during 2016 – invest, grow and create opportunity for the people of Massachusetts.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

The Seeds of Spring Hiring

Posted by Christopher Geehern on Nov 9, 2015 7:30:00 AM

The economic landscape may look a bit fallow in this fall season of China worries and political gridlock, but several recent reports suggest that the seeds of significant spring of job growth lie just beneath the surface.

ManufacturingWorkerSmallThe Associated Industries of Massachusetts Business Confidence Index released last week found that 32 percent of Massachusetts employers surveyed during October plan to add workers during the next six months while only 7 percent anticipate cutbacks. That’s a far brighter picture than that of the previous six months when 27 percent of companies hired people and 18 percent reduced their staff levels.

The news was even better on Friday as the government reported that the U.S. economy added 271,000 jobs last month on strong hiring that brought the unemployment rate down to a seven-year low of 5 percent. Average hourly earnings also bounced back, rising 0.4 percent in October and 2.5 percent over the last 12 months, the healthiest pace since 2009.

The unemployment rate for Massachusetts, which has consistently outperformed the national economy throughout the recovery, was 4.6 percent for September. October state data is scheduled for release on November 19.

Employers remain circumspect in the face of an economy that slowed to a 1.5 percent growth rate during the third quarter (the state growth rate also slipped to 2.0 percent), but they appear to regard the slowdown as a cyclical pause rather than a structural shift. It’s the same view that experts believe will now persuade the Federal Reserve to increase interest rates before the end of the year.

“The employment responses reveal optimism,” said Fred Breimyer, regional economist at the FDIC and a member of the AIM Board of Economic Advisors that oversees publication of the Business Confidence Index.

Analysts say almost every element in the Friday jobs report was positive. For example, the broader U-6 measure that takes account of underemployment and discouraged workers fell below 10 percent at 9.8 percent.

“It was pretty much everything you could ask for in a jobs report,” Michelle Meyer, deputy head of United States economics at Bank of America Merrill Lynch, told The New York Times. “Not only was the headline number strong, but there were upward revisions for prior months, the unemployment rate fell and wage growth accelerated.”

The degree to which that wage growth continues depends upon whether hiring by employers is broad enough to finally eliminate the slack that built up in the labor market after the recession of 2009. Annual surveys by AIM and other organizations have found that wage growth has remained consistently at 3 percent throughout the steady if unspectacular job growth of the recovery.

Wages could become a particular issue in fast-growing states like Massachusetts where technology driven industries continue to face a shortage of qualified workers.

“Massachusetts continues to out-perform the nation as a whole economically, which is reflected in persistently higher readings for the Massachusetts Index compared to the U.S. Index,” said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, and another member of the AIM Board of Economic Advisors.

Our local economy is of course affected by national and global conditions, but its underlying strengths are keeping us competitive through ups and downs.”  

Topics: Massachusetts economy, Economy, Jobs

Employers Remain Confident, But Wary

Posted by Andre Mayer on Oct 6, 2015 9:39:32 AM

There is no Alan Greenspan-style “irrational exuberance” among Massachusetts employers these days.

BCI.September.2015The people who run businesses throughout the commonwealth remain confident about the overall state of the economy, but a global growth slowdown and domestic political uncertainty are leaving them more circumspect than in the spring.

The Associated Industries of Massachusetts Business Confidence Index shed 1.2 points in September to 55.9, leaving it a point and a half above its reading of last September (54.4). The average confidence reading during the third quarter of 2015 was 57.4, barely below the second quarter (57.6) and higher than the fourth (56.3) and third (54.9) quarters of 2014.

“Although this is the Index’s fifth decline in six months, the trend is more sideways than downward,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“While the economy has been chugging along at present, business confidence appears to have suffered as a result of concerns about future uncertainties…Internationally, the slowdown in China sidelines one of the principal engines of global growth, while our other major export markets – Western Europe, Canada, Japan – are all weak.”

Release of the Business Confidence Index comes five days after the government announced dismal employment numbers for September and two weeks after the Federal Reserve decided that the economy remains too fragile to raise interest rates from their near-zero level.

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 sub-indices based on selected questions or respondent characteristics were mostly down from August to September, but mostly up compared to September 2014. The U.S. Index assessing national business conditions edged off a tenth to 50.6, while Massachusetts Index of conditions within the Commonwealth lost two points to 54.7.

“The commonwealth’s economy is currently performing very well, with strong job creation and solid GDP growth,” said BEA member Michael D. Goodman, Executive Director of the Public Policy Center at UMass Dartmouth. “Despite some significant sectoral and regional imbalances, Massachusetts has consistently outpaced the national economy throughout the recovery and expansion periods, and the state’s industry mix is helping to buffer it from the full impact of a slowing global economy.”  

The Company Index, which assesses the overall situations of their operations, was off 1.3 points at 58.1; the Sales Index lost 2.9 to 57.7; and the Employment Index was down half a point at 54.7.

Topics: AIM Business Confidence Index, Massachusetts economy, 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

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