Massachusetts employers are more confident about the economy than at any time since before the Great Recession.
It is a confidence that may reflect a recovery that has finally gained enough momentum to tighten a labor market that has remained slack since the economy bottomed out in 2009.
The Associated Industries of Massachusetts Business Confidence Index (BCI) released this morning ended 2014 at 57.3, 7.1 points above last December’s level and its highest point since before the recession in July 2007.
“Fundamentals are looking much better – unemployment is down and job creation is running strong nationally and in Massachusetts, which shows up in rising consumer confidence; the federal deficit and the trade deficit are shrinking; and of course the stock market has done well,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.
“Despite significant areas of weakness in the global economy, Massachusetts employers have ample cause to be optimistic.”
Analysts say that optimism and a strengthening underlying economy may finally make the recovery feel like a recovery in 2015.
“For the second half of 2014, twice as many employers report increasing their staff (34 percent) as cutting jobs (17 percent); and expectations are likewise positive for the first half of 2015 (33 percent – 9 percent),” said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, a BEA member.
“This is in line with what we have been seeing in state employment reports, and raises the question of how quickly the Massachusetts labor market may tighten in the year ahead.”
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 Massachusetts Index, assessing business conditions within the commonwealth, added a point on the month to 56.1, and the U.S. Index of national business conditions was up four-tenths to 50.1. The Current Index, which assesses overall business conditions at the time of the survey, was up 1.2 points to 56.2, while the Future Index, measuring expectations for six months out, shed a tenth to 58.4. The annual gains were 7.6 and 6.8 respectively.
Employers in the manufacturing sector were somewhat less positive (55.5, +0.2) than other employers (59.4, -0.1) as some companies continue to struggle with a changing economic landscape.
“For some employers the recession is in the past, while others are finding success elusive in a changed environment,” Paul Bolger, President, Massachusetts Capital Resource Company.