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Employers Ring Out 2019 on Confident Note

Posted by Christopher Geehern on Jan 14, 2020 8:00:00 AM

Massachusetts employers rang out 2019 on an optimistic note as business confidence rose to its highest level in 15 months.

BCI.December.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 1.6 points to 62.2 last month, leaving it comfortably within optimistic territory 3.6 points higher than a year ago.

The strong year-end results were driven by brightening views of the US economy and an increasingly bullish outlook among Bay State manufacturers.

The results came during a month when the US economy created 145,000 jobs to cap a decade of steady payroll gains that marked the longest growth period in 80 years of record-keeping. December also saw an easing of the international trade tensions that disquieted employers for much of 2019.

“Business confidence remained steady and strong throughout 2019 as employers saw underlying strength in the economy through sometimes distracting political uncertainties,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA).

The AIM Index, based on a survey of more than 100 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 Business Confidence Index moved mostly higher in December.
The US Index assessing business conditions nationally surged 3.6 points during the month and 7.7 points for the year to 62.8. The Massachusetts Index lost 1.8 points in December but remained higher than the national reading at 65.2

The Future Index, measuring expectations for six months out, gained 2.1 points to 61.6, leaving it 4.3 points higher than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.1 points to 62.8, an increase of 2.8 points over 12 months.

The Employment Index was up 0.9 points in December and 1.0 points for all of 2019 amid a persistent shortage of workers that may become worse as large number of baby boomers retire.

Non-manufacturers (63.2) were slightly more confident than manufacturing companies (61.4). Large companies (65.2) were more optimistic than small (61.7) or medium-sized (60.5) companies. Companies in Eastern Massachusetts (62.7) remained more optimistic than those in the west (61.6).

Sara L. Johnson, Executive Director of Global Economics at IHS Markit and a BEA member, said global economic growth appears to be stabilizing, supported by fiscal and monetary stimulus in the United States, China, Western Europe, and Japan.

“After slowing from 3.2 percent in 2018 to 2.6 percent in 2019, global real GDP growth is projected to hold steady in 2020. The ratcheting down of trade tensions, progress on the US-Mexico-Canada Agreement, favorable financial market conditions, and resilient consumer spending contributed to a sense of stability at the close of 2019,” Johnson said.

Pending Issues

AIM President and CEO John R. Regan, also BEA member, said employers face an eventful 2020 as state policymakers wrestle with major issues such as transportation financing, health reform and the implementation of paid family and medical leave.

“The Baker administration and the Massachusetts Legislature have done a commendable job managing the state budget while maintaining an environment of economic growth. The decision to allow the MassHealth employer assessment to sunset indicates that lawmakers understand that overburdening business will ultimately constrict economic opportunity,” Regan said.

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

Business Confidence Steady as Economy Remains Solid

Posted by Christopher Geehern on Dec 10, 2019 7:38:12 AM

The Thanksgiving holiday left Massachusetts employers in a good but cautious mood as business confidence remained steady during November.

BCI.November.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.3 points to 60.6 last month, leaving it one point lower than its level of a year ago but three points higher than in January.

The results came during a month when the Massachusetts unemployment rate remained at an historic low of 2.9 percent and employers nationally created a stronger-than-expected 266,000 new jobs. Employers also spent the month trying to make sense of the on-again, off-again trade war with China.

The US economy grew at a deliberate 1.9 percent pace during the third quarter, while the Massachusetts economy contracted by 0.2 percent as employers began to bump up against labor-force constraints.

“The AIM Business Confidence Index has drifted up and down amid a swirl of economic and political uncertainties during 2019, but employers have remained consistently optimistic about their overall prospects,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA).

The AIM Index, based on a survey of more than 100 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 Business Confidence Index all moved in a narrow range during November.

The Massachusetts Index assessing business conditions within the commonwealth lost 0.8 points to 67.0 while the US Index declined 0.4 points to 59.2. The Massachusetts Index is virtually even with its level of a year ago; the US index has dropped 4.5 points during the past 12 months.

The Future Index, measuring expectations for six months out, gained 0.9 points to 59.5 after surging during October. The Current Index, which assesses overall business conditions at the time of the survey, fell 1.6 points to 61.7, almost a point lower than a year ago.

The Employment Index remained even for the month, leaving it 1.3 points higher for the year, underscoring the capacity issues faced by employers struggling to find qualified workers in a full-employment state economy.

Non-manufacturers (62.2) were slightly more confident than manufacturing companies (59.3), which have been most directly affected by uncertainty surrounding trade policy. Medium-sized companies (61.2) were more optimistic than large companies (60.8) or small companies (59.2). Companies in Eastern Massachusetts (61.2) remained more optimistic than those in the west (59.8).

Barry Bluestone, retired Professor of Public Policy and Urban Affairs at Northeastern University and a BEA member, said Massachusetts policymakers appear ready to address issues such as housing and transportation that will affect the ability of the commonwealth to attract and retain skilled workers.

“The economic future of Massachusetts rests with highly educated and highly skilled people who will maintain the commonwealth’s status as a global center of economic growth and innovation. But those people will not put down roots here if they can’t afford housing or navigate their way to work,” Bluestone said.

The Moderate Middle

AIM President and CEO John R. Regan, also BEA member, said political leaders in Massachusetts continue to show a willingness to collaborate on critical economic problems. He noted that the Baker Administration and the Legislature worked together in November to pass a landmark $1.5 billion public-school funding reform that contained accountability measures sought by business.

“The partisan polarization that characterizes much of our political debate misses the fact that there is a moderate middle in America seeking action on important issues. A study from New Center shows that 43 percent of Americans classify themselves in the political center, compared with 34 percent for the right and 23 percent for the left,” Regan said.

“The results make us optimistic that bipartisan cooperation will continue in Massachusetts on issues such as transportation, health costs and taxation.”
.

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

Resilient Economy Boosts Business Confidence

Posted by Christopher Geehern on Nov 12, 2019 8:00:00 AM

Business confidence strengthened in Massachusetts last month amid signs that the state and national economies are more resilient than many experts predicted.

BCI.October.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2 points to 60.9 last month, leaving it virtually even with its level of a year ago.

The October upswing was led by growing employer optimism in the Massachusetts and national economies, as well as brightening prospects for manufacturers.

The survey results came during a month when US employers added a stronger-than-expected 128,000 jobs. And while the Massachusetts economy contracted slightly during the third quarter, experts say the reversal reflects workforce capacity limits rather than an economic downturn.

“U.S. hiring was unexpectedly resilient in October and prior months saw upward revisions. It appears that consumers will extend the record-long expansion despite trade tensions and weak business investment,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA).

The AIM Index, based on a survey of more than 100 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 Business Confidence Index all moved higher during October.

The Massachusetts Index assessing business conditions within the commonwealth surged 4.5 points to 67.8 while the US Index rose 3.1 points to 59.6. The increase left the Massachusetts reading 3 points higher than a year ago; the US index has dropped by 2 points during the past 12 months.

The Future Index, measuring expectations for six months out, gained 2.2 points to 58.6, virtually even with its reading from October 2018. The Current Index, which assesses overall business conditions at the time of the survey, increased 2.0 points to 63.3, also matching its reading of a year ago.

The Employment Index rose slightly by 0.3 points for the month but remained down 2.5 points for the year, underscoring the capacity issues faced by employers struggling to find qualified workers in a full-employment state economy.

Non-manufacturers (63.4) were more confident than manufacturers (59.0), despite a strong October gain in optimism among industrial companies. Small companies (63.6) were more optimistic than medium-sized companies (60.6) or large companies (59.6). Companies in Eastern Massachusetts (61.2) remained more optimistic than those in the west (60.4).

Paul Bolger, President, Massachusetts Capital Resource Company and a BEA member, said employers appear to have concluded that the slowing economy remains fundamentally strong enough to make a recession unlikely in the near future.

“Companies are also hoping that a preliminary trade agreement between China and the United States will clear up some of the uncertainty that has been causes by tariffs and an escalating trade battle,” Bolger said.

Business Battens the Hatches

AIM President and CEO John R. Regan, also BEA member, said the persistent shortage of skilled workers constraining the Massachusetts economy underscores the need for the Legislature to pass an education funding bill that establishes accountability for school districts to prepare students for both college and the workforce. 

“The job of sustaining Massachusetts’ global leadership in innovation belongs to everyone, and that requires a thoughtful, long-range plan to maintain our competitive advantage, including our education system. The foundation of such a plan is a set of educational standards that ensure our students’ continued achievement via distinct criteria,” Regan said.

“Whether Massachusetts high school graduates choose a college track or enter the workforce directly upon graduation, we must remain vigilant and insist on relevant, high standards to provide all our students with equal access to the economic advantages that follow educational achievement.”

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

Congratulations to Top Women-Led Companies

Posted by John Regan on Nov 8, 2019 10:59:02 AM

TopWomenLedBusinesses2019

AIM directors and staff gathered today to honor member companies included in the Commonwealth Institute/Boston Globe 2019 list of Top-Women-Led Businesses in Massachusetts. Left to right, AIM Director Emily Reichert, CEO of Greentown Labs; AIM Director Janice Goodman, Owner, Cityscapes; AIM Chief Financial Officer Cindy Lyman; AIM Diversity Consultant Juliette Mayers, CEO of Inspiration Zone; AIM Board Chair Joanne Hilferty, President & CEO of Top 100 honoree Morgan Memorial Goodwill Industries; AIM Treasurer Dennis Leonard, President & CEO of Delta Dental of Massachusetts; and AIM Executive Vice President of Government Affairs Brooke Thomson.

 

Associated Industries of Massachusetts congratulates 15 member employers named to the 2019 Top 100 Women-Led Businesses list released today by The Commonwealth Institute and The Boston Globe.

The companies range from financial services giant Fidelity Investments to construction firm E.T. & L. Corporation. Five of the companies are led by members of the AIM Board of Directors – Morgan Memorial Goodwill Industries of Boston, Joanne Hilferty, President and CEO; Lancaster Packaging Inc., Marianne Lancaster, Founder and President; Onyx Specialty Papers of South Lee, Patricia Begrowicz, President; Sensata Technologies, Martha Sullivan, President and CEO; and United Personnel Services Inc., Tricia Canavan, President and CEO.

“The companies on this list represent the best of the Massachusetts business community,” said John Regan, President and Chief Executive Officer of Associated Industries of Massachusetts.

“The women who own or run these companies have not just shattered glass ceilings but built their businesses in a manner that creates economic opportunity for all Massachusetts residents.”

AIM members on the list are:

  • Children's Hospital, Sandra Fenwick, President & COO
  • Catholic Charities of Boston, Debbie Rambo, President
  • Comcast (Greater Boston), Tracy Pitcher, Senior Vice President, Greater Boston
  • ET&L Corp, Jennie Colosi, President & Treasurer
  • Elaine Construction, Lisa Wexler, President
  • Fidelity Investments, Abigail Johnson, President & CEO
  • John Hancock, Marianne Harrison, CEO
  • Lancaster Packaging Inc., Marianne Lancaster, Founder & President
  • Lasell Village Inc., Anne Doyle, President
  • Massachusetts Medical Society, Lois Dehls Cornell, Executive Vice President
  • Morgan Memorial Goodwill Industries, Joanne Hilferty, President & CEO
  • Onyx Paper, Patricia Begrowicz, President
  • Sensata Technologies, Martha Sullivan, President & CEO
  • United Personnel Services, Tricia Canavan, President & CEO
  • UMass Lowell, Jacquie Moloney, Chancellor

The honorees were announced this morning at The Commonwealth Institute/Boston Globe Top 100 Women-Led Businesses breakfast.

Topics: Massachusetts employers, Diversity & Inclusion

Massachusetts Companies Wary of Economic Downturn

Posted by Christopher Geehern on Oct 7, 2019 8:30:00 AM

Two-thirds of Massachusetts employers surveyed by Associated Industries of Massachusetts anticipate an economic contraction before the end of 2020.

ManufacturingWorkerSmallMany of those companies are taking defensive measures ranging from hiring fewer people to paying down debt to limiting capital expenditures.

The survey results are based on responses from 111 Massachusetts companies representing almost every sector of the state economy. AIM collected the information as part of its monthly Business Confidence Index survey.

The sobering economic news comes as the Massachusetts Legislature debates billions of dollars in new spending on education, transportation and tax measures.

“A possible take-away from the survey for state policymakers as they begin considering billions of dollars in new spending is this could be a difficult time ahead for the state economy,” said John Regan, President and Chief Executive Officer of AIM.

“Businesses are assuming a defensive posture and significant tax increases - beyond the $1 billion for the new paid family and medical leave system - even for worthwhile causes, could harm the overall economy, most especially the manufacturing sector.”

Seventy-five companies that participated in the survey expect a contraction before the end of next year and 36 do not.

The companies that see a recession on the horizon are carefully managing payrolls, reducing expenses and developing relationships with customers insulated against downturns.

Comments include:

  • Scaling back on hiring plans. Slowing down certain capital expense/equipment purchases until we get a clearer picture of what the next six months will bring.
  • We have temporarily eliminated overtime work that was formerly unlimited.
  • Diversifying our service offerings.
  • Being a small manufacturing company, we can react quickly to changes in the business climate. Also, we will only invest in capital projects that significantly improve efficiencies and process with a payback of 18 months or less.
  • Concentrating on expense reduction - evaluating closely the need to replace positions as all employment related costs continue to increase - using methods such as combining roles in the short-term, hiring part-time as a replacement, reducing headcount by attrition or reorganizing an area.
  • Our workforce has already dropped ... Conditions have been very volatile for us, one month were up two or three months were down, next two months are up, two months after that were down considerably, next month moderate.
  • We have hired an outside firm to pursue sales opportunities.
  • We have cut our work force of temps and are currently on work-share. As we supply many markets, the two most impacted are agricultural equipment and trucking. The latter is a canary in the coal mine and has always been ahead of the economy. The agricultural industry is suffering from the cut in exports and the loss of markets due to tariffs. The continued list of tariff exemptions on imports for products we make also has a depressive affect.

Other companies believe they will ride out a downturn.

  • We think we'll be immune from the contraction.
  • Our industry is counter-cyclical. When the economy contracts, our industry usually receives a boost. 

The Massachusetts economy has continued to expand throughout 2019, though at a moderating pace as the year has progressed. Economic growth slowed from 2.7 percent in the first quarter to 1.4 percent in the second, according to MassBenchmarks.

The AIM Business Confidence Index has likewise remained in optimistic territory during the year but has lost 3.7 points during the past 12 months.

Conversely, the Massachusetts unemployment rate remains at 2.9 percent and private employers created 6,700 jobs between August 2018 and August 2019.

"The AIM survey ultimately argues for economic prudence and fiscal caution in the short term to allow the recent legislative and regulatory changes that have occurred over the last two sessions to take effect," said Brooke M. Thomson, Executive  Vice President of Government Affairs at AIM.

“Massachusetts is flourishing in many ways, and in the wake of such recent changes, we need policies and practices that will ensure the economy remains strong and that creates economic stability and regulatory certainty for employers.”

Topics: Associated Industries of Massachusetts, Massachusetts economy, Massachusetts employers

Tanglewood Makes Sweet Music for Berkshire County Economy

Posted by Christopher Geehern on Sep 23, 2019 2:11:17 PM

Associated Industries of Massachusetts presented a 2019 AIM Next Century Award last week to Tanglewood, summer home of the Boston Symphony Orchestra, citing the organization's contributions to the economy of Berkshire County. AIM President and CEO John Regan presented the award to Bart Reidy, the BSO's Chief Strategy Officer, during the annual AIM Employer Celebration in Pittsfield.

Topics: Massachusetts employers, AIM Next Century Award

Business Confidence Tumbles during August

Posted by Christopher Geehern on Sep 10, 2019 8:00:00 AM

Business confidence continued to seesaw during August as employers warily eyed a possible economic slowdown and the escalating trade war between the United States and China.

BCI.August.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) fell 3.3 points to 58.7 last month after surging 4.4 points during July. The Index has lost 4.5 points since August 2018 but remains within optimistic territory.

The August decline was driven by growing concern about the US economy and the outlook among manufacturers- both elements driven by trade concerns.

Analysts cautioned against reading too much into the month-to-month gyrations of the Business Confidence Index but noted that every measure of confidence now sits below its level of a year ago.

“The imposition of 15 percent tariffs on $112 billion worth of Chinese goods on September 1 underscores the uncertainty facing employers, particularly manufacturers, who do business in overseas markets,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer at the Harvard Graduate School of Design.

“At the same time, employers are beginning to see evidence from both customers and suppliers of a slowdown in the US economy. That caution is reflected in the 7.4-point confidence drop in the national outlook.”

The nation’s gross domestic product — the broadest gauge of economic health — grew at a moderate 2.0 percent annual rate in the April-June quarter, down from a 3.1 percent growth rate in the first quarter.

The AIM Index, based on a survey of more than 100 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 AIM BCI all decreased during August.

The Massachusetts Index assessing business conditions within the commonwealth fell 4.3 points to 63.9 while the US Index dropped to 55.2. The Massachusetts reading has decreased 0.8 points and the US reading 9.5 points during the past 12 months.

The Future Index, measuring expectations for six months out, declined 3.9 points to 56.9, leaving it 3.3 points lower than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, lost 2.7 points to 60.5, 5.6 points lower than its reading of August 2018.

The Employment Index slipped 1.5 points for the month and 3.8 points for the year even as the state unemployment rate fell to 2.9 percent. Employers continue to struggle to find qualified workers in a full-employment state economy.

Non-manufacturers (60.3) were more confident than manufacturers (57.1). Small companies (61.5) remained more confident than large companies (58.7) or medium-sized companies (56.3). Companies in Eastern Massachusetts (60.7) continue to be more optimistic than those in the west (56.0).

Katherine A. Kiel, Professor of Economics at the College of the Holy Cross, and a BEA member, said business confidence reflects the same volatility that has shaken global financial markets in recent months.

“Economic growth in Massachusetts slowed from 2.7 percent during the first quarter to 1.4 percent in the second.

Employers remain optimistic overall but see growing downside risks ranging from demographic constraints on the labor force to international uncertainty caused by factors such as tariffs and Brexit,” Kiel said.

State Policy Gains

AIM President and CEO John R. Regan, also BEA member, said employers will be watching closely this fall as the Massachusetts Legislature debates an education funding bill that could begin to address the persistent shortage of skilled workers in the economy.

“The 3,500 member companies of Associated Industries of Massachusetts (AIM) who depend upon the public schools to prepare the workforce of the future support education reform that contains specific and measurable performance objectives. Anyone who owns or manages a business tracks return on investment and the investment we make in our public schools and students should be no different,” Regan said.

Topics: AIM Business Confidence Index, Massachusetts employers, Economy

Employer Confidence Rises Despite Uncertainty

Posted by Christopher Geehern on Aug 6, 2019 8:18:48 AM

Massachusetts employers shrugged off mounting evidence of an economic slowdown during July and expressed growing confidence in both the state and national economies.

BCI.July.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 4.4 points to 62.0 last month, reaching its highest level since September. The Index has gained 0.8 points during the past 12 months and remains comfortably within optimistic territory.

The confidence surge was driven by optimism in the Massachusetts economy and a strengthening outlook among manufacturers.

“We have to be cautious in reading large month-to-month changes in the Business Confidence Index, but the fact that employers are more optimistic than they were a year ago and six months ago is a good sign,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer at the Harvard Graduate School of Design.

“With a host of seemingly conflicting indicators at play – unemployment in Massachusetts remains at a low 2.9 percent while economic growth slowed from an annualized rate of 2.7 percent to 1.4 percent during the second quarter – it will be interesting to see how employer optimism holds up for the rest of 2019.”

The AIM Index, based on a survey of more than 100 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 July confidence survey was taken after the government reported that US employers added 164,000 jobs during June and before President Donald Trump announced another round of tariffs on Chinese products.

Constituent Indicators

The constituent indicators that make up the AIM BCI all increased during July.

The Massachusetts Index assessing business conditions within the commonwealth surged 7 points to 68.2 while the US Index rose 4.6 points to 62.6. The Massachusetts reading has risen 3.1 points and the US reading 0.7 points during the past 12 months.

The Future Index, measuring expectations for six months out, rose 4.6 points to 60.8, leaving it 2.1 points higher than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, gained 4.2 points to 63.2, virtually even with its reading of July 2018.

The Employment Index gained 1.9 points for the month and 0.2 points for the year. Employers continue to struggle to find qualified workers in a full-employment state economy facing a demographic challenge as baby boomers leave the work force.

Non-manufacturers (63.6) were more confident than manufacturers (60.5), who remain concerned about the consequences of tariffs and trade tensions. Small companies (65.2) were more confident than large companies (58.9) or medium-sized companies (62.3). Companies in Eastern Massachusetts (63.3) continued to be more optimistic than those in the west (59.8).

Michael D. Goodman, Executive Director of the Public Policy Center at UMass Dartmouth, and a BEA member, said business confidence remains volatile amid a swirl of economic and political issues ranging from trade to the availability of qualified workers.

“Employer optimism may reflect the fact that the Massachusetts economy should be somewhat insulated during these final stages of the economic expansion by a unique industry mix dominated by technology and innovation companies,” Goodman said.

Wrong Time to Raise Costs

AIM President and CEO John R. Regan, also BEA member, said Massachusetts employers already burdened with business and compliance costs could face more of the same soon as the state Legislature debates ways to raise revenue for big-ticket issues such as transportation and education.

“Beacon Hill is awash with calls for more revenue. But the slowing of the economy during the second quarter means this is exactly the wrong time to place additional cost burdens on business,” Regan said.

“If the economy goes into a downturn while costs are increasing that will create big challenges for employers.”

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

Employer Confidence Stabilizes in June

Posted by Christopher Geehern on Jul 9, 2019 8:46:46 AM

Employer confidence stabilized in Massachusetts during June despite a continued swirl of conflicting economic and political signals around the globe.

BCI.June.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 0.5 points to 57.6 last month, rebounding from a May drop that left it at its lowest level since October 2016.

The Index has declined 3.7 points since June 2018 but remains within optimistic territory. And though confidence levels are virtually unchanged since January, the AIM Index reflects constantly changing headlines about international trade, economic growth and the direction of interest rates.

“We’re seeing confidence go up one month and down the next in the same way that financial markets have been whipsawed by almost daily changes in the economic outlook,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Employers remain concerned about the prospect of an economic slowdown but were encouraged at the end of June by larger-than-expected job growth numbers, signs of a thaw in the US/China trade battle and signals that the Federal Reserve might ease interest rates.”

Tariffs continue to influence employer confidence.

“Have seen cost increases for construction materials due to the effect of tariffs. This is creating some uncertainty in the pricing of new construction projects,” one member wrote.

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 AIM BCI were mixed during June.

The Massachusetts Index assessing business conditions within the commonwealth rose 0.3 points to 61.2 while the US Index rose a full 3 points to 58.0. The Massachusetts reading has declined 1.6 points during the past 12 months and the US reading has dropped 2.0 points during the same period.

The Future Index, measuring expectations for six months out, rose slightly, 0.2 points to 56.2. The Current Index, which assesses overall business conditions at the time of the survey, gained 0.8 points to 59.0, 4.5 points lower than a year ago.

The Employment Index declined 0.4 points for the month and 2.2 percent for 12 months. Analysts say employers continue to struggle to find qualified workers in a state economy with a 2.9 percent jobless rate.

Non-manufacturers (60.1) were more confident than manufacturers (54.4), who have seen their confidence levels drop 8.1 percent since June 2018. Large companies (59.0) were more confident than small companies (58.4) or medium-sized companies (55.6). Companies in Eastern Massachusetts (58.5) continued to be more optimistic than those in the west (56.3).

Elliot Winer, Chief Economist, Winer Economic Consulting, LLC, and a BEA member, said continuing weakness in the Company Index, Manufacturing Index and Employment Index underscores some of the long-term challenges facing Massachusetts employers beyond the day-to-day headlines.

“Hiring and retaining skilled employees is becoming a barrier to expansion for some companies. The short-term issues affecting confidence will eventually be overshadowed by the long-term demographics of having large numbers of baby boomers leave the work force,” Winer said.

State Policy Gains

AIM President and CEO John R. Regan, also BEA member, said that Governor Charlie Baker and the Massachusetts Legislature have made several decisions recently that boosted employer confidence. Those decisions included postponing the start of contributions for paid family leave and allowing the MassHealth assessment to lapse as scheduled in December.

“Employer have been encouraged by the willingness of state policymakers to meet businesses halfway on some of these complex issues,” Regan said.

“Our hope is that lawmakers will continue this mindful approach to the economy.”

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

Meet 2019 AIM Vision Honoree Wayfair Inc.

Posted by Christopher Geehern on May 22, 2019 2:47:54 PM

Associated Industries of Massachusetts last week presented its 2019 Vision Award to Wayfair Inc., a Massachusetts-born technology company that has redefined how people shop for their homes. Wayfair has more than 5,500 full-time employees in the commonwealth and continues to grow its presence in Boston and beyond. Here is the company's story.

Topics: AIM Annual Meeting, Massachusetts employers, AIM Vision Award

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