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Employers Maintain Mixed Feelings About Economy

Posted by Andre Mayer on Jan 5, 2016, 8:04:12 AM

Massachusetts employers regard the economy with the same mix of emotions that many Patriots fans felt after Sunday’s game in Miami – trending in the wrong direction but still in an enviable place overall.

BCI.December2015.jpgThroughout 2015, every reading of the Associated Industries of Massachusetts Business Confidence Index was above 55, making this the first time since the Great Recession that the Index remained above a neutral reading of 50 for a full calendar year.

At the same time, the AIM Index shed 1.6 points in December to 55.3 to close 2015 down two points from its level at the end of 2014.

“We had not had a year with readings steadily above 55 since 2004. From that perspective, 2015 was a year of progress for our economy and for the state’s employer community,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

 “We can also look back on 2015 as ‘tilting down year’ in business confidence,“ Torto went on, “because following first-quarter gains the Index saw declines in seven of the last nine months, and ended up in December at its lowest level of 2015. This pattern reflects increasing concern about a myriad of global economic issues including economic stability, especially around China, as well as the impact of weaker export markets combined with a strong dollar.” 

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.

Most components of the Business Confidence Index were down a point or two in December and most were down year-over-year.

The Massachusetts Index, assessing business conditions within the commonwealth, lost two points to 56.3, ending the year up two-tenths from last December. The U.S. Index of national business conditions, at 50.0, was off 1.2 on the month and one-tenth on the year.

The Company Index, reflecting overall business conditions, was down 1.6 points at 56.7; the Sales Index shed a point to 58.2; and the Employment Index lost 1.3 to 53.6.

“Our survey found the employment trend weakening in the second half of 2015 as 28 percent of respondents reported adding staff while 21 percent reduced employment,” said Paul Bolger, President, Massachusetts Capital Resource Company, a BEA member.

“Expectations for the next six months were somewhat stronger – 26 percent hiring and only 13 percent downsizing. On a special question about capital investment, 42 percent of respondents expected an increase in 2016 compared to 2015, and 46 percent expected about the same level of expenditure.”  

Topics: AIM Business Confidence Index, Massachusetts economy

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