Daily News

Employer Confidence in Massachusetts Hits 14-year High

BOSTON — Employers are more confident about the Massachusetts economy than they have been in 14 years. In the latest Business Confidence Index released by Associated Industries of Massachusetts (AIM), employer confidence in the Bay State economy surged 3.2 points to 59.3, on a 100-point scale, in January. Overall business confidence rose for the fifth consecutive month, to 58.1, while the U.S. Index of business conditions nationally rose 4.0 points to 54.1.

“These are landmark figures,” said Katherine Kiel, professor of Economics at the College of the Holy Cross and a member of the AIM board of economic advisors. “The national indicator is at a level not seen since before the Great Recession, in August 2007, and its state counterpart had not been this high since before the previous recession, in December 2000. Business confidence in Massachusetts conditions, like total statewide employment, did not fully recover from that earlier downturn before the next one hit.”

Added Richard Lord, AIM’s president and CEO, “our members rate conditions within the Commonwealth better than they have been in 14 years.” Lord noted that the January Business Confidence Index survey included a question asking employers how they saw Massachusetts as a place to do business in 2015. “Forty-two percent of respondents chose ‘the best’ or ‘very good,’ while only 8% went with ‘below par,’” he said. “It’s a credit to our business community, our workforce, and our political leadership that employer perceptions are so positive.”

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of its board of economic advisors. Presented on a 100-point scale on which 50 is neutral, the index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. Economists say rising confidence leads to economic growth.

“When the Federal Reserve notes strong job growth and solid expansion, as it did in its assessment last week, it’s important to recognize that businesses are creating those jobs because they are feeling confident about the future,” said Raymond Torto, chair of AIM’s board of economic advisors (BEA) and lecturer at Harvard Graduate School of Design.

The cheers for the economy were not, however, without reservation. The Current Index, tracking employers’ assessment of existing business conditions, edged off one-tenth to 56.1, while the Future Index, measuring expectations for the next six months, added 1.7 to 60.1. Meanwhile, the three sub-indices related to survey respondents’ own operations all weakened in January. The Company Index, in which employers assess the situations of their own operations, was down a point to 59.1; the Sales Index shed six-tenths to 60.7; and the Employment Index fell 2.8 to 53.9.

“The sales and employment numbers are off for the second consecutive month,” noted Michael Goodman, associate professor of Public Policy and executive director of the Public Policy Center at UMass Dartmouth, and a BEA member. “However, respondents expect both sales and hiring to increase in the next six months. Over the past six months, respondents reporting adding new staff have outnumbered those reporting layoffs, 29% to 22%, while expectations for the next six months are much stronger, with 33% reporting plans to hire and 11% expecting staffing reductions.”