Employer Confidence Rises Despite Euro Crisis, US Debt Standoff

Posted by Andre Mayer on Dec 6, 2011 2:53:00 PM

Massachusetts employers see the economic glass half full, despite the ongoing European debt crisis and the failure to the Congressional super-committee to agree on a deficit-reduction plan for the United States.

Business Confidence IndexThe AIM Business Confidence Index (BCI) jumped 3.7 points in November to 50.1, edging above neutral on a 100-point scale. Economists say employers appear to have accepted the slow, halting nature of the economic recovery and do not believe that fiscal problems on both sides of the Atlantic will push the nation back into recession.

The November increase broke a three-month decline in employer confidence, but still left the BCI two points lower than a year ago.

“Massachusetts employers foresee slow improvement rather than deterioration,” said Raymond G. Torto, Global Chief Economist at CB Richard Ellis Group, Inc., the chair of AIM’s Board of Economic Advisors (BEA).

He noted that while the November Business Confidence survey was taken before the bipartisan Congressional super-committee announced its failure to reach agreement, the result was a foregone conclusion for most respondents. Fifty-nine percent of employers who participated said they were discouraged by the deficit debate, and only 20 percent expected a positive outcome.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Its historical high was 68.5, attained in 1997 and 1998; its all-time low was 33.3 in February 2009.

Employers remain far more optimistic about conditions six months from now than about current conditions. The BCI’s Future Index surged 6.3 points during November to 51.3, while the assessment of current conditions rose slightly to 48.9.

And confidence is strongest close to home. Only 1 percent of survey respondents called current national conditions ‘good’, compared to 12 percent who viewed state conditions as good and 40 percent who were bullish about their own companies.

The level of confidence among employers of their own operations may not be enough to stimulate hiring.

“The Company Index has been positive since March 2010, but despite November’s gain it is 10 points below its post-recession peak in April 2011,” noted BEA member Sara L. Johnson, Senior Research Director, Global Economics, IHS Global Insight.

Topics: AIM Business Confidence Index, Issues, Jobs

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