The Thanksgiving holiday left Massachusetts employers in a good but cautious mood as business confidence remained steady during November.
The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.3 points to 60.6 last month, leaving it one point lower than its level of a year ago but three points higher than in January.
The results came during a month when the Massachusetts unemployment rate remained at an historic low of 2.9 percent and employers nationally created a stronger-than-expected 266,000 new jobs. Employers also spent the month trying to make sense of the on-again, off-again trade war with China.
The US economy grew at a deliberate 1.9 percent pace during the third quarter, while the Massachusetts economy contracted by 0.2 percent as employers began to bump up against labor-force constraints.
“The AIM Business Confidence Index has drifted up and down amid a swirl of economic and political uncertainties during 2019, but employers have remained consistently optimistic about their overall prospects,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA).
The AIM Index, based on a survey of more than 100 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 Business Confidence Index all moved in a narrow range during November.
The Massachusetts Index assessing business conditions within the commonwealth lost 0.8 points to 67.0 while the US Index declined 0.4 points to 59.2. The Massachusetts Index is virtually even with its level of a year ago; the US index has dropped 4.5 points during the past 12 months.
The Future Index, measuring expectations for six months out, gained 0.9 points to 59.5 after surging during October. The Current Index, which assesses overall business conditions at the time of the survey, fell 1.6 points to 61.7, almost a point lower than a year ago.
The Employment Index remained even for the month, leaving it 1.3 points higher for the year, underscoring the capacity issues faced by employers struggling to find qualified workers in a full-employment state economy.
Non-manufacturers (62.2) were slightly more confident than manufacturing companies (59.3), which have been most directly affected by uncertainty surrounding trade policy. Medium-sized companies (61.2) were more optimistic than large companies (60.8) or small companies (59.2). Companies in Eastern Massachusetts (61.2) remained more optimistic than those in the west (59.8).
Barry Bluestone, retired Professor of Public Policy and Urban Affairs at Northeastern University and a BEA member, said Massachusetts policymakers appear ready to address issues such as housing and transportation that will affect the ability of the commonwealth to attract and retain skilled workers.
“The economic future of Massachusetts rests with highly educated and highly skilled people who will maintain the commonwealth’s status as a global center of economic growth and innovation. But those people will not put down roots here if they can’t afford housing or navigate their way to work,” Bluestone said.
The Moderate Middle
AIM President and CEO John R. Regan, also BEA member, said political leaders in Massachusetts continue to show a willingness to collaborate on critical economic problems. He noted that the Baker Administration and the Legislature worked together in November to pass a landmark $1.5 billion public-school funding reform that contained accountability measures sought by business.
“The partisan polarization that characterizes much of our political debate misses the fact that there is a moderate middle in America seeking action on important issues. A study from New Center shows that 43 percent of Americans classify themselves in the political center, compared with 34 percent for the right and 23 percent for the left,” Regan said.
“The results make us optimistic that bipartisan cooperation will continue in Massachusetts on issues such as transportation, health costs and taxation.”