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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

Business Confidence Hits Another High for 2017

Posted by Christopher Geehern on Nov 7, 2017 8:27:44 AM

Employer confidence in Massachusetts hit another high for 2017 during October as economic growth accelerated and companies remained optimistic about the national outlook.

BCI.October.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.3 points to 62.7, leaving it 6.5 points better than in October 2016. The uptick was driven by a brightening view of employment growth and firming confidence among manufacturers.

The reading came as MassBenchmarks reported that the Massachusetts economy grew at 5.9 percent during the third quarter, almost double the rate of the national economy. Payroll employment grew at a 2.1 percent annual rate in Massachusetts in the third quarter as compared to 1.2 percent nationally.

“The acceleration of the Massachusetts economy in the third quarter provided additional fuel to an already solid sense of confidence among employers as we head for 2018,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, optimism about the national economy suggests that employers believe growth rates throughout the US will increase even more if Congress follows through on its proposal to lower the corporate tax rate from 35 percent to 20 percent.”

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 pointed mostly higher during October.

The Massachusetts Index, assessing business conditions within the commonwealth, slipped 0.3 points to 65.1, still 4.1 points more than a year earlier. October marked the 91st consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The U.S. Index of national business conditions rose 2.7 points to 62.5, continuing a 13.3-point surge for the 12-month period. 

The Current Index, which assesses overall business conditions at the time of the survey, increased 0.7 points to 63.6 while the Future Index, measuring expectations for six months out, remained even at 61.9 points. The Current Index has risen 7.6 points and the Future Index 5.6 points during the past year.

Operational Views

The Company Index, reflecting overall business conditions, lost 0.3 points to 62.0. There was better news in the Employment Index, a key predictor of economic health, which rose 2.0 points to 57.8.

“The Massachusetts economy continues to grow at a robust pace and to add jobs in a broad array of sectors despite tightening regional labor markets. With the statewide unemployment rate now below four percent, it is not clear the commonwealth’s economic expansion is sustainable at its current pace,” noted Professor Michael D. Goodman, Executive Director of the Public Policy Center (PPC) at UMass Dartmouth and a BEA member.
Massachusetts Concerns

AIM President and CEO Richard C. Lord, a BEA member, said employer optimism continues to be tempered by the prospect of three potentially destructive ballot questions appearing on the 2018 state election ballot.

“Massachusetts employers face an unprecedented public-policy crisis as activists seek 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,” Lord said.

“Having just honored 16 Massachusetts employers for creating jobs and economic opportunity for the people of Massachusetts, AIM remains concerned about ballot questions that are clearly intended to be punitive toward employers.”

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

There's Life in the Massachusetts Manufacturing Sector

Posted by Brian Gilmore on Oct 6, 2017 8:30:00 AM

Today is Manufacturing Day in the United States as the nation celebrates the economic contributions of companies and employees who make everything from machine tools to biopharmaceuticals.

McGovern.jpgEvery day is manufacturing day in Massachusetts, where some 245,000 highly skilled people create goods that drive research, exports and wages that surpass the state average by 25 percent. There’s life in the Massachusetts manufacturing sector, a fact that has been clearly illustrated as AIM has presented Next Century and Sustainability awards at a series of regional celebrations throughout the commonwealth this month.

In Springfield on September 28, OMG Inc. of Agawam, originally known as Olympic Fasteners, accepted the AIM Next Century Award for growing into one the nation’s foremost manufacturers of screws, washer plates, vents, adhesives and construction equipment for commercial flat roofs. The company employs about 400 people in Agawam, and recently completed a $15 million expansion of its heat-treating operations.

(Right, OMG President Hubert McGovern accepts the Next Century Award)

Two Worcester manufacturers, Table Talk Pies and AbbVie, Inc. earned Next Century Awards during a reception last night at Mechanics Hall in Worcester. Office furniture maker AIS of Leominster, meanwhile, was honored with the 2017 AIM Sustainability Award recognizing excellence in environmental stewardship, promotion of social well-being and contributions to economic prosperity.

AbbeVie’s Worcester 450,000-square foot campus research and manufacturing facility in Worcester employs 900 people. The company also operates the Foundational Neuroscience Center in Cambridge with approximately 50 scientists focusing on neurodegenerative diseases. The firm’s employees have forged a strong presence in the community with the company’s worldwide Week of Possibilities program.

The once struggling Table Top Pies is now settled into a modern manufacturing facility in the South Worcester Industrial Park. In 2016 the business posted nearly $100 million in sales, with 300 full-time and seasonal employees. In addition, Table Talk invested between $3.5 and $ 4 million in new equipment, and opened its first retail store in 20 years.

AIS, a leading office furniture manufacturer in Leominster, is also a sustainable manufacturer. The company recently deployed a state-of-the art solar energy system that produces half of their energy. AIS is also smart and strategic about the size and location of operations and uses the principles of LEAN manufacturing. Business benefits have followed. The firm has reduced energy usage by 40 percent and saved more than $ 1.6 million, while supporting 100 percent on-time delivery. 

 

Topics: Massachusetts economy, Manufacturing

Employer Confidence Rebounds

Posted by Christopher Geehern on Oct 3, 2017 9:05:54 AM

Massachusetts employers are as optimistic as they have been all year about the overall economy and prospects for their own businesses.

BCI.September.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) broke a two-month slide in September, rising 1.2 points to 62.4. The reading equaled its high for 2017 and was 6.5 points better than a year ago.

Employer confidence has moved in a narrow range so far in 2017 as employers appear bullish about the growth prospects of their companies. The September uptick was driven in part by a 5.7-point surge in the sales index, which is often a leading indicator of increased business activity.

“The Index was also taken prior to the announcement of an effort by Congressional Republicans and the White House to significantly reduce corporate taxes, a move that enjoys broad support among employers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The prospect of tax reform and tax simplification is likely to buoy employer sentiment through the end of the 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.

The constituent indicators that make up the overall Business Confidence Index were generally higher during September.

The Massachusetts Index, assessing business conditions within the commonwealth, rose 2.2 points to 65.4, a reading that was 8.4 points higher than in September 2016.

The U.S. Index of national business conditions dropped 0.4 points to 59.8 after surging more than 10 points during the previous 12 months. September marked the 90th 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, increased 1.6 points to 62.9 while the Future Index, measuring expectations for six months out, rose 0.7 points to 61.29 The Future Index ended the month 5.9 points higher than a year ago.

The Company Index, reflecting overall business conditions, gained 1.4 points to 62.3. The employment Index fell 2.2 points to 55.8, continuing an up-and-down pattern within the mid-50s on the 100-point scale.

“The Massachusetts economy continues to maintain a steady recovery, with employers adding 10,800 jobs during August and the state jobless rate declining to 4.2 percent,” said Elmore Alexander, Dean, Ricciardi College of Business, Bridgewater State University, and a BEA member.

“The surge in the AIM Sales and Future indices suggests that business activity may actually accelerate in coming months, so the primary challenge for employers will remain hiring and retaining skilled workers in a tight labor market.”

AIM President and CEO Richard C. Lord, a BEA member, said employers generally support federal initiatives to reduce business taxes, but also remain concerned about the potential effect those reductions might have on the federal deficit.

It is ironic, Lord said, that the proposed Republican tax plan would lower levies for subchapter S corporations and other small pass-through businesses, while Massachusetts voters may be voting on a surtax next year on those same companies.

“Subchapter s corporations and other companies that pay taxes on the individual level are generally small to medium-sized enterprises that form the heart of the Massachusetts economy. What a shame it would be if the federal government were to help these companies while Massachusetts penalizes them,” he said.

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

$15 Minimum Wage, Paid Family Leave Approved for Ballot

Posted by Christopher Geehern on Sep 6, 2017 2:46:50 PM

Attorney General Maura Healey today certified proposals for mandated paid family leave and a $15 per-hour minimum wage for inclusion on the 2018 statewide ballot questions.

Votingsmall.jpgThe two initiative petitions were among 21 potential ballot questions certified by the attorney general. Also approved were petitions to reduce the sales tax and re-establish an annual sales-tax holiday. Of concern to the business community were petitions to raise the annual percentage of renewable energy use in Massachusetts and mandate nurse-staffing ratios by statute.

The decisions mean that the 2018 ballot may contain three major proposals of concern to business – the paid leave and minimum wage petitions, and a constitutional amendment that would establish a 4 percent surtax on incomes of more than $1 million.

“The employers of Associated Industries of Massachusetts are deeply disappointed with the decision to certify the paid-leave and minimum-wage increase questions. The paid-leave petition would create a new $1.3 billion benefit program that could increase by 40 percent every year,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

“Employers will review the attorney general’s certification before deciding on the next step.”

The paid-leave proposal would allow covered workers to take up to 16 weeks of family leave or 26 weeks of medical leave. Workers could take family leave to care for a child after the child’s birth, adoption, or placement in foster care; to care for a seriously ill family member; or to address needs arising from a family member’s active duty military service.

Workers taking family or medical leave would receive 90 percent of their average weekly earnings, up to $1,000 per week. Beginning January 1, 2021, the weekly cap on benefits could be adjusted annually based on the Consumer Price Index published by the United States Department of Labor for the Boston metropolitan area.

The proposed law would create a trust fund into which employers would pay 0.63 percent of each employee’s annual wages, up to half of which could be deducted from employee wages. Beginning October 1, 2021, the contribution rate would be reviewed and adjusted annually to ensure funding of at least 140 percent of the amounts paid out during the previous year.

AIM estimates that the likely cost per week per employee to fund the program will exceed $520 per employee yearly, more than the average $508 per employee that companies now pay for the $1.3 billion Massachusetts Unemployment Insurance program.

The minimum wage proposal would boost the commonwealth’s base wage from the current $11 per hour to $12 in 2019; $13 in 2020; $14 in 2021; and $15 in 2022. The proposed law would also raise the minimum cash wage that must be paid to tipped employees, which was $3.75 per hour as of January 1, 2017, to $5.05 in 2019; $6.35 in 2020; $7.64 in 2021; and $9 in 2022.

Topics: Minimum Wage, Massachusetts economy, Mandated Paid Leave, Paid Family Leave

Employer Confidence Dips; Overall View Remains Optimistic

Posted by Christopher Geehern on Sep 5, 2017 7:30:00 AM

Massachusetts employer confidence edged lower for the second consecutive month during August, but remained comfortably in optimistic territory.

BCI.August.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) shed 0.3 points to 61.2 last month, leaving it 7.1 points higher than a year ago. The Index has been essentially flat since April and now stands 0.2 points lower than at the beginning of 2017.

Last month’s slip reflected offsetting trends in employer attitudes about conditions inside and outside their walls. Employers grew less bullish about their own companies during the month, but showed growing optimism about the national economy and about prospects for manufacturers.

“Employer confidence continues to move in a narrow range defined by broad optimism about both the state and national economies,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The steady level of confidence readings above the 60 mark reflect a state economy that grew at a 4 percent annual rate during the second quarter while maintaining a steady level of employment growth.”

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.

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

The Massachusetts Index, assessing business conditions within the commonwealth, remained unchanged at 63.2, still 6.3 points higher than in August 2016.

The U.S. Index of national business conditions rose 2.3 points to 60.2 amid strong signs of job expansion nationally. The US Index has risen 10.6 points during the past year, more than any other element of the overall Business Confidence Index.

Still, August marked the 89th 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, edged up 0.1 points points to 61.3 while the Future Index, measuring expectations for six months out, dropped 0.6 points to 61.2. The Future Index ended the month 6.3 points higher than a year ago.

The Company Index, reflecting overall business conditions, lost 1.3 points to 60.9. The employment Index surged 2.3 points to 58.0 after losing ground during July.

Executives at manufacturing companies and those at non-manufacturing enterprises maintained almost identical confidence readings – 61.1 for manufacturers, 61.3 for non-manufacturers. The AIM Manufacturing Index has surged 9.9 points during the past year.

“Manufacturers in Massachusetts remain optimistic even though national economic signals for that sector remain mixed. The Institute for Supply Management manufacturing index was strong August, but the IHS Markit US Manufacturing PMI showed manufacturing expanding at its slowest pace since June 2016,” said Edward H. Pendergast, Managing Director of Dunn Rush & Co. in Boston and a BEA member.

Confidence was also remarkably consistent across all geographic regions of the commonwealth. Eastern Massachusetts companies posted a 61.3 reading during August versus 61.1 for companies in western Massachusetts.

AIM President and CEO Richard C. Lord, a BEA member, noted that a significant number of employers who responded to the August survey expressed frustration with the new $200 million health-insurance surcharge and the proliferation of complex and expensive employment laws.

“Amid a generally strong economy, employers feel under siege from a government and an electorate that seem willing to impose crushing financial burdens on job creators in the name of social progress,” Lord said.

“Employers are telling us that additional measures that may be headed to the statewide ballot – paid family leave, a $15 minimum wage and a punitive surtax on incomes of more than $1 million – may force them to relocate.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

New Greenhouse Regulations Will Drive Up Costs for Employers

Posted by Bob Rio on Aug 11, 2017 11:29:19 AM

The Baker Administration will today introduce new regulations that set specific limits on sources of greenhouse gases, the emissions linked to climate change. State officials indicate that the regulations could increase costs to electric ratepayers by as much as 2 percent.

Electriclinessmall.jpgThe new rules aim to reduce the state’s carbon emissions 25 percent below 1990 levels by 2020, as required by state law.

Robert Rio, Senior Vice President of Government Affairs at AIM, issued the following statement:

“The 4,000 member employers of Associated Industries of Massachusetts are extremely disappointed with the Baker administration’s new electricity sector regulations. The administration openly admits that these rules will increase Massachusetts electric rates that are already among the highest in the nation.

“The increases produced by the proposed rules, when combined with other pending cost increases, could raise the electric bills of Massachusetts employers some 10 percent in the next year alone.

“These regulations are ultimately unnecessary. The administration could have chosen to work with the legislature to change the Global Warming Solutions Act to allow for alternative ways for the electricity sector to meet these obligations.  Instead, the administration has turned a blind eye to the corrosive impacts that high electric rates are having on struggling Massachusetts companies.

“The cost increases produced will harm consumers as well through higher rents, taxes and other costs of doing business.   

“AIM supports clean energy and is a leader in working with the administration to transition the power sector to cleaner sources.  These regulations are a setback to that effort."

Topics: Massachusetts economy, Environment, Energy

Business Confidence Weakens Slightly in July

Posted by Christopher Geehern on Aug 1, 2017 9:19:07 AM

Massachusetts employer confidence meandered through the first full month of the summer, edging down during July but remaining well within optimistic territory.

BCI.July.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) shed 0.3 points to 61.5 last month, leaving it 6.4 points higher than a year ago. The Index has gained ground in five of seven months so far in 2017.

The July slip was led by the Employment Index, which dropped 2.4 points from June. Experts on the AIM Board of Economic Advisors believe the slide reflects employers’ inability to hire skilled workers amid a tight labor market rather than a hiring slowdown caused by economic factors.

“Confidence levels at or above 60 signal continued strong confidence among employers in the direction of the state and national economies,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The labor shortage is a serious issue. We hear anecdotes from companies in multiple industries that are turning away business or postponing expansions because they can’t find tech specialists, manufacturing workers or electricians to take the new jobs.”

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, lost a point to 63.2, still six points higher than in July 2016.

The U.S. Index of national business conditions rose 0.5 points to 57.9 despite lingering uncertainty about federal health-care and economic policy. July marked the 88th 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 0.7 points to 61.2 while the Future Index, measuring expectations for six months out, edged up 0.1 point to 61.8. The Future Index ended the month seven points higher than a year ago.

Operational Views

The Company Index, reflecting overall business conditions, lost 0.2 points to 62.2, up 6.3 points during the 12-month period. And though the employment Index dropped to 55.7 the Sales index rose for the third consecutive month, gaining 1.5 points to 64.1.

The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months are similar – 37 percent hiring and only 10 percent downsizing.

Elliot Winer, Chief Economist, Winer Economic Consulting, said workers with the type of skills needed by employers in growing industries remain in short supply, even though Massachusetts has posted significant increases to its labor force so far in 2017.

“Employers report that it is increasingly hard to fill jobs. Job vacancies now significantly exceed new hiring. And yet, wage growth in the state has been near zero when adjusted for inflation,” Winer said.

Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.5 confidence reading in June versus 60.5 for employers in the west.

Manufacturing companies remained optimistic about the economy with the 59.6 confidence reading, but not as optimistic as employers outside the manufacturing sector, who posted a 63.6 result.

Massachusetts Backlash?

AIM President and CEO Richard C. Lord, also a BEA member, noted that employer confidence in the Massachusetts economy has stalled as the state legislature has taken several troubling votes, including one last week to force employers to close a $200 million gap in MassHealth with no long-term reforms to the program.

“Employers are thus left not only to struggle with the rising cost of providing health insurance to their own employees, but to bail out an unsustainable public insurance program as well,” Lord said.

“There are consequences to raising the cost of doing business and declining confidence is a red flag for what may come next.”

Topics: AIM Business Confidence Index, Massachusetts economy

Employer Confidence Strengthens Again

Posted by Christopher Geehern on Jul 5, 2017 10:08:03 AM

Massachusetts employer confidence rose for the ninth time in 10 months during June amid optimism about an economy that is finally attracting more people into the work force.

BCI.June.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 61.8 last month, leaving it 5.7 points higher than a year ago. The Index has gained ground in each of the past two months after slipping in April.

The results come a month after state officials reported a long-awaited expansion of the Massachusetts labor market – the labor-force participation rate rose to 66.7 percent in May, its highest mark since before the Great Recession.

“Employer confidence in both the state and national economies remains well above the level we saw a year ago, especially among manufacturers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Key Massachusetts indicators such as total jobs, wages and gross state product far exceed pre-recession levels and that is outweighing concerns about long-term growth.”

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.

The constituent indicators that make up the overall Business Confidence Index were mostly positive during June.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 2.1 points to 64.2, leaving it 5.7 points higher than in June 2016.

The U.S. Index of national business conditions rose 2.8 points to 57.4 despite lingering uncertainty about federal economic policy. June marked the 87th 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 1.5 points to 61.9 while the Future Index, measuring expectations for six months out, increased 0.4 points to 61.7. The Future Index was 5.1 points higher than a year ago.

The Company Index, reflecting overall business conditions, was unchanged for the month at 62.4 and up 4.7 points during the 12-month period. The Employment Index fell 0.4 points to 58.1 while the Sales index rose 0.6 points to 62.6.
The AIM survey found that 39 percent of respondents reported adding staff during the past six months while 18 percent reduced employment. Expectations for the next six months are stable – 38 percent hiring and only 10 percent downsizing.

Alan Clayton-Matthews, a professor in the School of Public Policy and Urban Affairs at Northeastern University, said the supply of workers remains one of the most important factors in the ability of Massachusetts to maintain long-term economic growth.

“There is little slack left in the labor market. Unemployment rates are back to pre-recession levels, and employment rates are very close to pre-recession levels. The slack that does remain is largely among young workers, those with less than a high-school education, and part-time workers who have been unable to find full-time work, suggesting that many workers lack the skills that employers are seeking,” Clayton-Matthews said.

Overall participation in the labor force nationally has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.
Eastern Massachusetts companies were more confident in June than those in the western portion of the commonwealth. Eastern Massachusetts employers posted a 61.8 confidence reading in June versus 60.8 for employers in the west.

AIM President and CEO Richard C. Lord, also a BEA member, said employers are increasingly concerned about a passel of potentially expensive and disruptive Beacon Hill proposals, including a surtax on incomes more than $1 million, paid family leave and an employer assessment to close a budget gap in the MassHealth program.

“Massachusetts employers have led what is now one of the longest and most consistent economic recoveries of the past 100 years. Much of that growth reflects the fact that policymakers have refrained from unnecessarily raising business costs and imposing inefficient regulation,” Lord said.

“We look forward to working with the Legislature and the Baker administration to ensure that those policies continue.”

Topics: Employers, AIM Business Confidence Index, Massachusetts economy

Employer Confidence Rebounds in May

Posted by Christopher Geehern on Jun 6, 2017 8:29:22 AM

Massachusetts employer confidence resumed its upward trajectory during May as companies expressed renewed optimism about their own business prospects and hiring plans.

BCI.May.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.6 points to 60.8 last month after retreating from a 13-year high in April. The Index has increased in eight of the past nine months and now stands 3.1 points higher than in May 2016.

The May advance was led by strengthening employer confidence in their companies, rather than their overall views of the state and national economies. Manufacturers were particularly bullish, ending May a full 7 points higher than a year earlier.

“We were not surprised to see confidence readings correct slightly in April, and the May results suggest that employers still feel positive about the future,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“In fact, employers seem to have more confidence in their own economic prospects than in the broader economies in which they operate.”

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.

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

The Massachusetts Index, assessing business conditions within the commonwealth, lost 1.2 points to 62.1, leaving it a slim 1.8 points higher than in May 2016.

The U.S. Index of national business conditions shed 2.3 points to 57.2, its second consecutive decline. May marked the 86th 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 0.5 points to 60.4 while the Future Index, measuring expectations for six months out, increased 0.8 points to 61.3. The Future Index was 3.2 points higher than a year ago.

The Company Index, reflecting overall business conditions, gained 2.2 points for the month and 3.2 points for the 12-month period to 60.2. The Employment Index rose 2.3 points to 58.5, and the Sales Index was up 1.5 points to 62.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months are more optimistic – 38 percent hiring and only 10 percent downsizing.

Sara L. Johnson, Senior Research Director, Global Economics, IHS Markit, and a BEA member, said it is encouraging that employers are looking at their own balance sheets and feeling confident enough to anticipate stepped-up hiring.

“The overall AIM Index continues to move in a range that suggests solid optimism among employers, both in the current time frame and six months into the future. As optimism turns to hiring, the tight labor market is likely to put upward pressure on wages,” Johnson said.

The changing dynamics of the labor market were underscored last week when the government issued a jobs report that reflected a decline in the share of working-age adults who have a job or are in the market for one. Overall participation in the labor force has hovered below 63 percent during the recovery, compared with more than 66 percent before the recession.

For the second time in three months, Western Massachusetts companies were more confident in May than those in the eastern portion of the commonwealth. Western Massachusetts employers posted a 61.2 confidence reading in May versus 60.9 for employers in the western part of the state.

AIM President and CEO Richard C. Lord, also a BEA member, said employers appear to be drawing encouragement from within rather than looking for clues amid the chaotic and often contradictory signals of the overall economy and political debate.

“Employers, like everyone else, are still trying to digest the economic implications of the United States pulling out of the climate-change accord. They are also trying to balance the promise of meaningful federal tax reform with concern about renegotiated trade agreements and Medicaid changes that could blow a $2 billion hole in the state budget,” Lord aid.

“Amid all those factors, the potential acceleration of hiring speaks to the resiliency of Massachusetts employers and the global pre-eminence of their products and services.”

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

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