Massachusetts Business Outlook Remains Stable, but Slightly Pessimistic

BOSTON — Business confidence among Massachusetts employers remained stable — if slightly pessimistic — during August as employer sentiment bounced between a steady economy and policy uncertainty.

The Associated Industries of Massachusetts (AIM) Business Confidence Index (BCI) gained 0.4 points last month to 49.0, continuing to move in a narrow range just below the 50 reading separating optimism from pessimism.

The August BCI was 2.0 points less than the same month a year ago. It marked the sixth consecutive month that confidence remained in the pessimistic range. The results came amid mixed economic signals in both Massachusetts and the nation.

MassBenchmarks reports that the state economy grew at a solid 2.6% annual rate during the second quarter, but the 4.8% unemployment rate in Massachusetts during July was significantly higher than the national mark of 4.2%. National inflation, measured by the consumer price index, remained steady at 2.7% year-on-year in July. Federal Reserve Chair Jerome Powell gave his clearest indication yet on Aug. 22 that the policy interest rate might be reduced as soon as September.

“The overall economic picture is complex, featuring a resilient stock market driven by AI optimism that contrasts with weaker consumer sentiment and a cautious Federal Reserve, which may cut interest rates soon. That complexity continues to color business confidence in Massachusetts,” said Sara Johnson, chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

The AIM Index, based on a survey of more than 140 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.

AIM President and CEO Brooke Thomson, also a BEA member, agreed that uncertainty has become the watchword for AIM’s 3,400 member companies.

“Whether you’re a student wondering about your future job prospects, a business owner navigating shifting markets, or a worker trying to make ends meet, economic uncertainty touches us all,” she said. “Emerging technologies like AI are reshaping entire industries. Changes in federal policy and funding streams have hamstrung the research, medical, and innovation industries that have long underpinned the state economy. Tariffs both imposed and threatened have changed the landscape of international trade, where Massachusetts companies sell $35 billion of goods and $42 billion in services each year to foreign markets. And central banks are walking a tightrope between fighting inflation and supporting growth.”