Confidence among Massachusetts employers remained virtually unchanged during March as companies struggled to build enthusiasm for a recovery that remains real but far from robust.
The Associated Industries of Massachusetts Business Confidence Index (BCI) declined one-tenth of a point to 54.8 last month, breaking a string of four consecutive monthly gains. Most employers reported "good" or "average" business conditions, but some continue to face serious challenges and many are aware of economic and political uncertainties ahead.
“The question is whether this is a brief pause in upward movement, a plateau or even the beginning of a decline,” said Raymond G. Torto, Global Chief Economist at CB Richard Ellis Group, Inc., the chair of AIM’s Board of Economic Advisors (BEA).
“In 2011 the year started well, but there was a significant slowdown in the middle period and we ended below where we started.”
Added Richard C. Lord, President and Chief Executive Officer of AIM: “The missing ingredient in our economic recovery is jobs – the recession won’t really be over until we put people back to work.”
AIM’s Business Confidence Index has been issued monthly since July 1991. Its historical high was 68.5, attained in 1997 and 1998 and its all-time low was 33.3 in February 2009. The Index uses a 100-point scale with readings of more than 50 indicating a positive outlook on the economy.
Employers remained more confident during March about their own companies, at 58.5, than about the overall economy. Companies are selling more and hiring less - the AIM Company Sales Index added 1.4 to 57.6, while the Employment Index shed three-tenths at 55.6.
“Since October, the Employment Index has fallen behind the Sales Index,” said Katherine A. Kiel, Professor of Economics at the College of the Holy Cross, a BEA member.
“Looking ahead, 30 percent of responding employers expect to add staff in the next six months, compared to 10 percent foreseeing reductions, which is positive but weaker than February’s result (32 percent-3 percent). We are not yet seeing the surge of job creation that will finally put the recession behind us.”
The absence of a hiring surge is creating contradictory signs throughout the American economy. The Institute of Supply Management reported this week that its index of U.S. economic activity rose for the 34th consecutive month in March, while the unemployment rate in Massachusetts has remained stuck at 6.9 percent since the beginning of 2012 after falling for much of last year.
Employer confidence in current economic conditions rose to a four-year high of 53.0 during March, according to the AIM Index, but expectations about conditions six months from now dropped 1.1 points to 56.7. Employers remain significantly more bullish about the Bay State economy than the national economy.