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.
The 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.”