AIMBlog_Logo_Resized

Strong Economy Boosts Business Confidence

Posted by Christopher Geehern on Sep 11, 2018 5:10:00 AM

Massachusetts employers were equally confident about the national and state economies during August, breaking an eight-and-a-half-year run in which they were more bullish about the commonwealth than the nation as a whole.

BCI.August.2018The brightening view of the US economy boosted overall business confidence as employers headed for the end of the third quarter.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 2 points to 63.2 last month after tumbling more than five points during June and July. The gain left the BCI two points higher than a year ago, comfortably within optimistic territory.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said the last time employers were more optimistic about the national economy than the state was during the nadir of the Great Recession in May 2009 when the AIM BCI Massachusetts Index was 33.1 and the US Index was 34.4.

“The confluence of opinion reflects gathering optimism about the US economy rather than any weakness in the Massachusetts business climate. The Massachusetts Index rose 1.5 points during the year, but the US Index soared 4.5 points during that same period,” Torto said.

The optimism about national prospects came despite persistent concerns about rising production costs generated by tariffs and other factors.

“Steel tariffs are causing major cost escalation on goods and equipment ordered for installations. Freight costs are also rising rapidly. Many manufacturers of our equipment orders are refusing to quote freight until day of shipment and will not even give estimate of freight costs,” wrote one BCI participant.

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were largely higher during August.

The Company Index measuring employer assessments of their own operations rose 2.4 points to 62.1, up 1.2 points from August 2017. The Employment Index gained 2.4 points to end the month at 57.0 while the Sales Index lost 0.8 points to 61.0.

The Current Index, which assesses overall business conditions at the time of the survey, rose 2.5 points to 66.1, leaving it 4.8 points higher than the year earlier. The Future Index, measuring expectations for six months out, rose 1.5 points during August, but remained down 1.0 point for the year.

Non-manufacturing companies (63.6) were slightly more optimistic than manufacturers (62.8). Companies in the eastern part of Massachusetts (65.2) were more bullish than those in the west (60.8).

“All of these numbers are well within optimistic range and reflect the views of employers operating in a state economy that grew at a 7.3 percent annual rate during the second quarter. The acceleration in economic growth underscored strong gains in employment, earnings, and consumer and business spending,” said Elliot Winer, Chief Economist, Winer Economic Consulting, LLC, and a BEA member.

“Underlying economic strength is, for the moment, overshadowing a somewhat unpredictable public policy environment.”

Historically strong economy

AIM President and CEO Richard C. Lord, also BEA member, agreed that employers are driving a Massachusetts economy that remains historically strong.

“The state unemployment rate remains at 3.5 percent, wage and salary income surged 19.2 percent during the second quarter and economic output has accelerated,” Lord said. 

He cautioned, however, that the escalating series of tariffs and retaliatory tariffs among the US and its trading partners are starting to take a toll on Massachusetts employers.

“The thousands of member employers of Associated Industries of Massachusetts (AIM) are increasingly concerned about the negative effect of current and proposed tariffs on Massachusetts companies. Particularly alarming are tariffs on raw materials, components and finished goods coming from China,” Lord said.

“While we concur with the need to address China’s unfair trade practices, we do not believe that tariffs are the best strategy. Tariffs are already hurting our companies here in Massachusetts and additional damage is anticipated, by business owners and leaders.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Business Confidence Flat During July

Posted by Christopher Geehern on Aug 7, 2018 9:07:47 AM

Confidence levels among Massachusetts employers were virtually unchanged during July as strong economic growth balanced persistent concerns about tariffs and escalating international trade tensions.

BCI.July.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) dropped 0.1 point to 61.2 last month after tumbling more than five points in June. The drop left the BCI three-tenths of a point lower than a year ago, though still comfortably within optimistic territory.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said employers grew justifiably bullish about the state and national economies during July while expressing uncertainty about their own prospects.

“The Manufacturing Index has dropped more than eight points during the past two months, pretty much concurrent with the escalation of trade tensions that are increasing prices, disrupting global supply chains and putting some companies in the crosshairs of retaliatory tariffs,” Torto said.

One BCI survey participant in the construction industry wrote: “The tariffs are escalating building costs. We get several price increases per week. It’s harder for most people to have the means to spend on up-keep, much less renovation or new construction.”

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mixed during July.

The Massachusetts Index assessing business conditions within the commonwealth gained 2.3 points to 65.1, leaving it 1.9 points ahead of July 2017.

The U.S. Index ended the month at 61.9, rising 1.9 points after sliding 9.3 points the previous month. The US Index was 4 points better than a year ago.

July marked the 101st consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, rose 0.1 point to 63.6. The

Future Index, measuring expectations for six months out, fell 0.4 point. The Current Index gained 2.4 points during the year while the Future Index lost 3.1 points.

Operational Views

Employer views of their own companies weakened.

The Company Index declined 1.5 points to 59.7, down 2.5 points for 12 months. The Employment Index ended the month at 54.5, a 0.5-point decrease for the month and 1.2 points lower than a year ago. The Sales Index lost 0.6 point for the month and 2.3 points for the year.

Non-manufacturing companies (63.0) were more optimistic than manufacturers (58.6). Companies in the eastern part of Massachusetts (63.6) were more bullish than those in the west (57.6).

“The Massachusetts economy itself remains strong and it accelerated sharply in the second quarter, bucking the expectation of slower growth due to low unemployment and demographic constraints,” said Elmore Alexander, Dean of the Ricciardi College of Business, Bridgewater State University.

“The recent surge in state economic growth reflects strong gains in employment, earnings, and consumer and business spending.”

New Laws in Massachusetts

AIM President and CEO Richard C. Lord, also BEA member, said employers spent much of July digesting a raft of new public policies passed by the Massachusetts Legislature as it wrapped up the formal portion of its 2017-2018 session.

“Employers face new restrictions on the use of non-compete agreements, imposition of paid family leave, an increased minimum wage and a wholesale shift in the generation of the energy they use,” Lord said.

“And that’s on top of the $200 million annual assessment on employers to close a budget gap in the MassHealth program. Employers clearly have a lot to think about.”

Topics: International Trade, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Weakens in June

Posted by Christopher Geehern on Jul 3, 2018 9:21:05 AM

Confidence among Massachusetts employers weakened considerably during June as tariffs, rising raw-material costs and approval of paid family and medical leave in the Bay State raised concerns about business growth.

BCI.June.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) dropped 5.3 points to 61.3 last month, its lowest level since August 2017. Confidence remains well within the optimistic range, but the June decline left the BCI slightly below its level of a year ago.

Though analysts say the volatility in business confidence during May and June may reflect some statistical anomalies, the comments provided by employers on the monthly AIM survey suggest that companies are becoming increasingly concerned about a perfect storm of issues on the federal and state levels.

“EMAC (employer MassHealth assessment) and paid sick time are going to put me out of business if something doesn’t change quickly,” wrote one employer.

Another wrote: “A trade war with China is going to cost jobs, not add them.”

“It is certainly significant that the AIM Business Confidence Index is lower than it was in June 2017. It is also significant that many of the individual indicators that make up the overall index - ranging from employer hiring plans to their views of the Massachusetts economy – are also lower than they were a year ago,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design. “It will be interesting to see how confidence changes during the summer as Massachusetts continues to operate at virtually full capacity.”

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index all lost ground during June.

The Massachusetts Index assessing business conditions within the commonwealth fell 7.2 points to 62.8, leaving it 1.4 points lower than in June 2017.

The U.S. Index ended the month at 60.0, down 9.3 points for the month but 2.6 points better than a year ago.
June marked the 100th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, declined 2.6 points to 63.5. The Future Index, measuring expectations for six months out, fell 7.5 points to 59.1. The Current Index gained 1.6 points during the year while the Future Index lost 2.6 points.

Employer views of their own companies also weakened.

The Company Index declined 3.3 points to 61.2, down 1.2 points for 12 months. The Employment Index ended the month at 55.0, a 3.3-point decrease for the month and 3.1 points lower than a year ago. The Sales Index lost 2.9 points for the month and 0.2 points for the year.

Manufacturing companies (62.5) were slightly more optimistic than non-manufacturers (60.2). Companies in the eastern part of Massachusetts (63.3) were more bullish than those in the west (58.7).

“It’s interesting to note that medium and small companies remain significantly more optimistic than larger companies, reversing the typical pattern,” said Edward H. Pendergast, Managing Director, Dunn Rush & Co. “Entrepreneurial companies continue to drive growth here in Massachusetts.”

The BCI decrease came a month after the Mass Insight index of consumer confidence in Massachusetts suffered its biggest quarterly decline in years, from 134 in February to 121 in May. The index remined in optimistic territory, but fell below a comparable index for national consumer confidence for the first time since 2014.

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said employers are feeling threats from all directions.

“Member employers are deeply concerned about a potential trade war with China and with key US trading partners such as Canada, Mexico and the European Union,” Lord said.

“At the same time, the Legislature last week passed a ‘grand bargain’ that will create a family- and medical-leave requirement and increase the state minimum wage from $11 per hour to $15 per hour. Those requirements, on top of the MassHealth assessment and other elements, continue to challenge employers.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

Employer Confidence Surges during May

Posted by Christopher Geehern on Jun 5, 2018 9:28:26 AM

Business confidence surged during May to its highest level since the summer of 2000, driven by improving employer outlooks about the state and national economies.

BCI.May.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.4 points to 66.6 last month after increasing modestly during April. The BCI has risen in five of the last six months and now stands 5.8 points higher than its level of a year ago.

Confidence remains well within the optimistic range. The only whiff of concern came in the index that measures hiring, which dropped 1.5 points for the month and 0.2 points during the year.

Economists believe the weakness in the AIM Employment Index reflects the persistent shortage of workers in Massachusetts that has forced some employers to postpone expansions or to decline new business opportunities.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, cautioned that major month-to-month movements in the Index like those in May sometimes reflect statistical or sampling anomalies. He noted, however, that the numbers are consistent with a general sense that the US and state economies are picking up steam in the second quarter after a slow start to 2018.

“There are signs GDP growth gathered momentum early in the second quarter, with solid consumer spending, business investment on equipment and industrial production,” Torto said.

The nation’s economy grew at a 2.2 percent rate during the first quarter. Hiring across the US remains strong, with the government reporting on Friday that employers added 223,000 jobs during May.

“And the Massachusetts economy continues to operate at virtually full capacity, creating significant constraints on the availability of labor,” said Torto.

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were largely higher in May.
The Massachusetts Index assessing business conditions within the commonwealth surged 5.9 points to 70.0, leaving it 7.9 points higher than in May 2017.

The U.S. Index ended the month at 69.3, up 5.4 points for the month and 14.4 points for the year.
May marked the 99th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, gained 1.5 points to 66.6. The Future Index, measuring expectations for six months out, increased 3.3 points to the same 66.6 level. The Current Index has risen 6.2 points and the Future Index 5.3 points since May 2017.

Employer views of their own companies were mixed.

The Company Index increased slightly to 64.5, up 2.1 points for 12 months. The Employment Index ended the month at 58.3, a 1.5-point decrease for the month and 0.2 points lower than a year ago. The Sales Index rose 1.7 points for the month and 3.3 points for the year.

Manufacturing companies (66.8) and non-manufacturers (66.3) were equally optimistic about the economy. Companies in the eastern part of Massachusetts (67.9) were more bullish than those in the west (64.6).

“Massachusetts employers remain confident, but economic growth in the commonwealth is increasingly bumping up against the structural shortage of skilled workers,” said Alan Clayton-Matthews, a BEA member and professor in the School of Public Policy & Urban Affairs, Northeastern University.

Clayton-Matthews told MassBenchmarks earlier this year: “Retiring baby boomers will continue to dampen labor force growth this year and throughout the next decade unless the commonwealth is able to attract young workers from across the country and the world.”

The BCI increase came as the Mass Insight index of consumer confidence in Massachusetts suffered its biggest quarterly decline in years, from 134 in February to 121 in May. The index remined in optimistic territory, but fell below a comparable index for national consumer confidence for the first time since 2014.

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said the increase in business confidence underscores the underlying strength of the economy at a time when employers are receiving mixed signals from government.

“On the one hand, employers are seeing benefits from federal tax reform. On the other hand, they are struggling to process the new Massachusetts health-care surcharge and looking ahead warily to the possibility that Massachusetts voters may approve a graduated income tax that could harm small businesses,” Lord said.

“AIM and the employer community are seeking to negotiate reasonable compromises on issues such as paid family/medical leave and a $15 per hour minimum wage, compromises that would allow employers to continue creating jobs for Massachusetts residents.”

Topics: Skills Gap, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Up Slightly in April

Posted by Christopher Geehern on May 8, 2018 8:48:02 AM

Business confidence strengthened during April as growing optimism among employers about the prospects of their own companies outweighed a more cautious outlook about the state and national economies.

BCI.April.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.7 points to 64.2 last month after falling a full point in March. The BCI has gained four points during the past 12 months and remains well within the optimistic range.

The April increase was driven by 2.6-point surge in the index measuring employer confidence in their own companies, along with a 2.5 percent jump in the Employment Index.

Those increases offset slippage in employer views of both the Massachusetts and US economies. The trend appears to be tied to specific issues such as imposition of the employer health-care surcharge in Massachusetts and commodity price increases stemming from the Trump administration’s tariffs on steel and aluminum.

“While business is good, I am not confident in the general direction and tax policies of the federal government. My impression is that short term gains will come at the expense of future economic, social, and environmental stability,” wrote one employer.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said the confidence numbers reflect a solid economy that is growing modestly – 1.6 percent annually on the state level and 2.3 percent annually for the United States.

“The Massachusetts economy is operating at virtually full capacity, but growth is slowing due to constraints on labor,” said Torto.

“Employers are certainly concerned about public policy issues, but those concerns for the moment are minimized by the underlying strength of their businesses.”

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index provided a study in contrasts during April.

The Massachusetts Index assessing business conditions within the commonwealth declined 2.8 points to 64.1, leaving it 0.8 points higher than in April 2017.

The U.S. Index ended the month at 63.9, down 1.3 points after rising 6.7 points during the previous 12 months. April marked the 98th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy, though the gap has recently narrowed.

The Current Index, which assesses overall business conditions at the time of the survey, gained 2.5 points to 65.1. The Future Index, measuring expectations for six months out, declined 1.1 points to 63.3. The Current Index has risen 5.2 points and the Future Index 2.8 points since April 2017.

Operational Views

Employer views of their own companies were far brighter.

The Company Index increased to 64.3, up 4.1 points for 12 months. The Employment Index ended the month at 59.8, a 3.6-point increase for the year.

Manufacturing companies (65.3) remained more optimistic than non-manufacturers (61.1). Large employers (66.1) were more bullish than medium-sized (63.4) or small businesses (63.4).

“Massachusetts employers have maintained a positive view of the economy since the fall of 2013. The numbers move up and down in a small range, and there are certainly long-term concerns about labor availability, but business confidence remains comfortably in positive range amid a full-employment economy,” said Sara L. Johnson, Executive Director, Global Economics, IHS Markit and a BEA member.

Competitive Playing Field

AIM President and CEO Richard C. Lord, also BEA member, pointed to the recent announcement by Philips Lighting that it will end manufacturing at its Fall River plant as evidence that Massachusetts must still pay attention to the cost of doing business.

“Many of the employers who responded to the April Business Confidence Index Survey expressed concern about the new $200 million health-care surcharge and its effect on small business,” Lord said.

“The surcharge was levied to close a budget deficit in the MassHealth program for low-income residents. AIM continues to work with the Legislature to institute structural reforms that will put that program on sound financial footing for the long term.” 

Topics: AIM Business Confidence Index, Massachusetts economy, Employer Health Assessment

Tariff Announcements Drive Down Business Confidence

Posted by Christopher Geehern on Apr 3, 2018 8:28:21 AM

Confidence among Massachusetts employers weakened during March amid roiling international trade tensions and volatile financial markets.

BCI.March.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) declined a point to 63.5, retreating from a 17-year high in February. The BCI has gained 1.1 points during the past 12 months and remains comfortably within the optimistic range.

But virtually every element of the March confidence survey lost ground, led by a 1.7-point drop in the US Index of national business conditions. Several employers blamed the Trump Administration’s decision to level tariffs on steel, aluminum and other products for their uncertain outlook.

“Tariffs on stainless steel and aluminum will negatively impact our bottom line in the short run and could prevent our customers from providing new projects due to increased costs,” wrote one employer.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said the steel and aluminum tariffs raise the prospect of retaliation by other nations against products made by Massachusetts companies.

“Trade wars reduce the competitiveness of Massachusetts companies and increase costs for consumers. Announcement of the tariffs sent financial markets into a tailspin last month and some of that uncertainty rubbed off on employers,” said Torto.

Cranberries, for example, a key Massachusetts agricultural export, were among the products targeted for retaliation by the European Union before the administration exempted that region from the steel and aluminum tariffs. Massachusetts companies exported $27.5 billion worth of products to foreign markets during 2017, with the largest share (13.5 percent) going to Canada.

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mostly lower during March.
The decline in the US Index was matched by a 1.6-point decline in the Massachusetts Index assessing business conditions within the commonwealth. The Massachusetts Index stood at 66.9, leaving it 3.2 points higher than in March 2017.

The U.S. Index ended the month at 65.2, 5.3 points better than a year ago. March marked the 97th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, lost 1.5 points to 62.6. The Future Index, measuring expectations for six months out, declined 0.6 points to 64.4. The Current Index has risen 0.8 points and the Future Index 1.4 points during the past 12 months.

Operational Views

The only element to gain ground was the Employment Index, which rose 0.9 points for the month but remained 1.7 points behind its level of a year ago. The Company Index, meanwhile, reflecting employer views of their own operations and prospects, was off 0.7 points to 61.7.

Manufacturing companies (65.4) were more optimistic than non-manufacturers (61.3). Large employers (68.8) were more bullish than medium-sized (60.3) or small businesses (65.2).

“There is no question that the whirlwind of events taking place in Washington, from the tax bill to trade sanctions, are affecting the outlook of Massachusetts employers,” said Barry Bluestone, Professor of Political Economy at Northeastern University, and a BEA member.

“But it’s also worth noting that the only two elements of the BCI that have declined during the past year are the Company Index and the Employment Index, two measures tied to the performance of individual companies. Overall confident remains strong, but those elements will be worth watching.”

Trade Battles

AIM President and CEO Richard C. Lord, also BEA member, said the announcement of tariffs and subsequent modifications of those tariffs by the administration has generated uncertainty among employers.

“Trade barriers are cause for concern in a state that exported more than $27 billion worth of goods in 2017,” Lord said.

“AIM and its member employers continue to believe that free trade and open markets remain the best way to ensure growth in the global economy.”

Topics: International Trade, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Strengthens, Despite Market Volatility

Posted by Christopher Geehern on Mar 6, 2018 7:40:45 AM

Massachusetts employer confidence strengthened during February as optimism about long-term economic growth outweighed a volatile month in the financial markets.

BCI.February.2018.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.4 points to 64.5, setting another 17-year high. The BCI has gained 2.4 points during the past 12 months as confidence levels have remained comfortably within the optimistic range.

Enthusiasm about the U.S. and Massachusetts economies, along with a bullish outlook on the part of manufacturers, fueled the February increase.

At the same time, hiring remained a red flag as the BCI Employment Index fell 4 points between February 2017 and February 2018. Almost 90 percent of employers who responded to the February confidence survey indicated that the inability to find skilled employees is either a modest, large or huge problem.

“Fourteen percent of respondents said finding employees represents a huge problem that is hampering their company’s growth. One-third of employers see employee recruitment as a big problem, while 29 percent see it as a modest issue,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“For the short-term, however, the state and national economies remain strong and the recent announcement by Amazon of a major expansion in Boston indicates that the trend should continue.”

The survey was taken before President Donald Trump roiled the financial markets last week by pledging to impose stiff tariffs on steel and aluminum imports.

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mixed during February.

The most significant gains came in the Manufacturing Index, which surged 3.9 points to 66.2, and the US Index, which rose 2.1 points for the month to 66.9 and 8.0 points for the year. The Massachusetts Index fell 0.4 points to 68.5, but was up 5.3 points for the year and still higher than the national outlook for the 96th consecutive month.

The Current Index, which assesses overall business conditions at the time of the survey, rose 2.4 points to 64.1.

The Future Index, measuring expectations for six months out, declined 1.6 points to 65. The Current Index has risen 4.2 points and the Future Index 0.6 points during the past 12 months.
Operational Views

The Company Index, reflecting employer views of their own operations and prospects, was essentially flat, gaining 0.1 points to 62.4. The Employment Index also rose 0.1 points, to 56.4, versus 60.4 in February 2017.

Manufacturing companies (66.2) were more optimistic than non-manufacturers (61.9). Large employers (69.8) were more bullish than medium-sized (62.0) or small businesses (62.7).

“The special February BCI question about the ability of employers to find and hire skilled employees confirms our concerns about the long-term changes now facing the Massachusetts labor market,” said Alan Clayton-Matthews, Ph.D., School of Public Policy & Urban Affairs, Northeastern University, and a BEA member.

“Since the end of the Great Recession, total employment has grown by 355,600, the working age population has increased by 326,700, and the labor force has grown by 208,100. In other words, employment in Massachusetts has grown considerably faster than the working age population, and almost twice as fast as the labor force.” 

AIM President and CEO Richard C. Lord, also BEA member, said member employers expressed broad optimism about the national economy in the wake of tax reform, but remain uncertain about Massachusetts given the prospect of ballot questions that would impose an income tax surcharge, mandate paid family leave and increase the minimum wage to $15 per hour.

“Massachusetts employers have been more bullish about the state economy than the national economy for 96 consecutive months, but the numbers are now very close – 68.5 for Massachusetts and 66.9 for the nation,” Lord said.

“Economic competitiveness is a constant struggle. AIM looks forward to working with the Legislature and Governor Baker during the next several months to ensure that Massachusetts companies are able to grow and prosper here.”

Topics: Skills Gap, AIM Business Confidence Index, Massachusetts economy

Employers Begin 2018 on Confident Note

Posted by Christopher Geehern on Feb 6, 2018 8:06:35 AM

Massachusetts employers began 2018 much the way they ended 2017 – with growing confidence in the economy and optimism about their own business prospects.

BCI.January.2018.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose half a point to 64.1 during January, setting another 17-year high. The BCI has gained 2.7 points during the past 12 months as employer confidence levels have remained comfortably within the optimistic range.

Growing enthusiasm about the Massachusetts economy and a brightening outlook on economic conditions six months from now fueled the January confidence increase. At the same time, the hiring outlook remained muted as low unemployment and demographic shifts continued to impede the ability of employers to find the workers they need.

The survey was taken prior to major declines in global financial markets during the past several days.

“Rising confidence is not surprising in a state with 3.5 percent unemployment and an economy that grew at a 3.3 percent annual rate during the fourth quarter,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Economic output, job growth and spending all rose at a healthy clip in Massachusetts during the final three months of the year and economists expect modest growth to continue during the first half of 2018.”

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 Index has remained above 50 since October 2013.

Constituent Indicators  

The constituent indicators that make up the overall Business Confidence Index were mixed during January.

The most significant gain came in the Massachusetts Index assessing business conditions within the commonwealth, which rose 1.3 points to 68.9. The Massachusetts Index has gained 3.7 points in the past two months, 5.5 points year over year and now stands at its highest level since November 2000.

The U.S. Index of national business conditions also continued a yearlong rally by gaining 0.6 points to 64.8. January marked the 95th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, decreased a point to 61.7 while the Future Index, measuring expectations for six months out, surged 2.1 points to 66.6. The Current Index has risen 2.1 points and the Future Index 3.3 points during the past 12 months.

Operational Views

The Company Index, reflecting employer views of their own operations and prospects, rose slightly, gaining 0.2 points to 62.3. The Employment Index was essentially flat, leaving it 2.1 points below its level of January 2017.

Non-manufacturing companies (66.6) were more optimistic than manufacturers (62.3). Large employers (67.2) were more bullish than medium-sized (62.7) or small businesses (63.5).

“The strong Future Index readings signal that employers anticipate steady growth during the first two quarters of 2018. The only fly in ointment remains the prospect that labor shortages may constrict the ability of companies to grow and expand,” said Paul Bolger, President, Massachusetts Capital Resource Company and a BEA member.

Political Risks

AIM President and CEO Richard C. Lord, also BEA member, said 2018 brings with it significant risk for employers as progressive groups push ballot questions that could create a $1 billion paid family and medical leave program, impose a punitive tax on many small businesses and raise the state minimum wage to $15 per hour.

“The Massachusetts Supreme Judicial Court will today hear arguments in a challenge that I and four other business leaders filed to the constitutionality of the income surtax question. Meanwhile, the business community is seeking common ground on a compromise paid-leave proposal that will not harm the economy,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Employer Confidence Closes 2017 at 18-Year High

Posted by Christopher Geehern on Jan 9, 2018 8:51:27 AM

Surging optimism about the state and national economies left Massachusetts employers with their highest level of confidence in 18 years as 2017 drew to a close.

BCI.December.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 63.6 during December, its highest level since November 2000. The BCI gained 3.2 points during a year in which employer confidence levels remained comfortably within the optimistic range.

Every element of the overall index increased during 2017 except for the Employment Index, which dropped half a point. Analysts believe low unemployment and demographic shifts are impeding the ability of employers to find the workers they need.

“Massachusetts employers maintained a uniformly positive outlook throughout 2017 and passage of the federal tax bill only added to that optimism,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, the 12-month decline in the Employment Index reminds us that the persistent shortage of skilled workers has reached an inflection point for the Massachusetts economy. Massachusetts companies have postponed expansions, declined to bid for contracts or outsourced work because they simply can’t find people.”

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mostly higher during December.

The Massachusetts Index, assessing business conditions within the commonwealth, surged 2.4 points to 67.6, leaving it 5.8 points better than a year earlier.

The U.S. Index of national business conditions continued a yearlong rally by gaining 2 points to 64.2. December marked the 94th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, decreased 0.7 points to 62.7 while the Future Index, measuring expectations for six months out, rose 2.7 points to 64.5. The Current Index gained 3.6 points and the Future Index 2.8 points during 2017.

Operational Views

The Company Index, reflecting employer views of their own operations and prospects, declined 0.2 points to 62.1.

The Employment Index rose slightly to 56.7, but still ended the year 0.5 points below the 57.2 posted in December 2016.

Manufacturing companies (64.3) continued to be more optimistic than non-manufacturers (62.6). Another unusual result was that employers in western Massachusetts (64.6) posted higher confidence readings than those in the eastern portion of the commonwealth (62.7).

“Employer attitudes largely reflect a national economy that grew at its fastest pace in three years during the third quarter on the strength of business spending on equipment. The headline is that unemployment is down and the financial markets are up,” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, and a BEA member.

AIM President and CEO Richard C. Lord, also BEA member, said employers received an early Christmas present from a federal tax bill that reduced corporate rates from 35 percent to 21 percent and reduced rates for pass-through entities such as subchapter S corporations as well.

“The tax bill produced short-term benefits, ranging from companies like Comcast and Citizens Financial providing bonuses to employees to the utility Eversource reducing electric rates in Massachusetts,” Lord said.

“At the same time, employers are cautious about the effect that other provisions – including limitations on the deduction for state and local taxes – will have on the overall Massachusetts economy.”

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Employer Confidence Flat; Labor Shortage Remains a Concern

Posted by Christopher Geehern on Dec 5, 2017 9:20:02 AM

Employer confidence in Massachusetts remained essentially unchanged during November as companies apparently began to bump up against a persistent shortage of qualified workers.

BCI.November.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.1 points off its 2017 high to 62.6, still 4.5 points better than in November 2016. The slight decline reflected a drop in confidence among non-manufacturing companies and a year-over-year decline in the index that measures employer hiring plans.

Analysts on the AIM Board of Economic Advisors (BEA) believe that Massachusetts may be suffering from too much of a good thing – a 3.7 percent unemployment rate that threatens to derail the ability of employers to find the workers they need to grow at a time when large number of baby boomers prepare to leave the work force.

“The concern is that Massachusetts could become a victim of its own success,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Employers feel optimistic about the state economy, the national economy and their own growth prospects, but they worry where the computer programmers, machinists and accountants needed to fuel that growth are going to come from and where they are going to live.”

Wage growth, however, remains muted. The AIM HR Practices Survey released yesterday shows that Massachusetts employers project average wage increases of 2.66 percent for 2018, down from 2.75 percent this year.

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 Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mixed during November.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 0.1 points to 65.2, leaving it 5.4 points better than a year earlier.

The U.S. Index of national business conditions lost 0.3 points to 62.2, pausing after a yearlong rally. October marked the 92nd consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, decreased 0.2 points to 63.4 while the Future Index, measuring expectations for six months out, edged down 0.1 points. The Current Index has risen 6.5 points and the Future Index 2.6 points during the past year.
Operational Views

The Company Index, reflecting overall business conditions, rose 0.3 points to 62.3. The most significant operational result, however, came in the Employment Index, which lost 1.2 points and ended the month 0.8 points below its level of a year ago. Another unusual result was that manufacturing companies were more optimistic than non-manufacturing companies.

“The movement of the overall Business Confidence Index was small as the economy continued to grow and add jobs at a healthy pace. But the weakness in the Employment Index suggests that the expansion may finally be bumping into a pervasive shortage of skilled workers across multiple industries,” said Katherine A. Kiel, Ph.D., Professor of Economics, College of the Holy Cross, and a BEA member.

Political Fireworks

AIM President and CEO Richard C. Lord, also BEA member, said employers remain upbeat despite uncertainty surrounding the federal and state political landscape.

“The tax bill passed last week by the US Senate contains a significant reduction in both corporate rates and rates for pass-through businesses, two provisions that are widely popular among employers. At the same time, employers are concerned about provisions that could become problematic for Massachusetts, including limits on the deductibility of state and local taxes, and loss of the federal research-and-development credit,” Lord said.

“All this is taking place as activists continue to work to place three questions on the 2018 Massachusetts election ballot that would together impede economic growth for a generation: a surtax on incomes of more than $1 million, an expansive and bureaucratic paid family leave program and an increase in the minimum wage.”

Topics: Skills Gap, AIM Business Confidence Index, Massachusetts economy

Subscribe to our blog

Posts by popularity

Browse by Tag