BOSTON — Massachusetts employer confidence strengthened during February as optimism about long-term economic growth outweighed a volatile month in the financial markets.
The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 0.4 points to 64.5, setting another 17-year high. The Index 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% 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% see it as a modest issue,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at 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 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. It has remained above 50 since October 2013.
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 U.S. 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.
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).