BOSTON — Massachusetts employers remained pessimistic during October amid conflicting signals from the economy and the COVID-19 pandemic.
The Associated Industries of Massachusetts (AIM) Business Confidence Index lost four-tenths of a point to 46.2 last month, up from a low of 38.4 in April but still 14.7 points lower than a year ago. The report was compiled prior to the Nov. 3 presidential election.
Overall business confidence was dampened by darkening views of both the state and national economies. The confidence reading for the Massachusetts economy has tumbled 24.9 points during the past 12 months.
The report comes a week after MassBenchmarks reported that the Massachusetts economy grew at a record 37.7% clip during the third quarter, regaining some of the ground it lost when the Commonwealth imposed a broad lockdown during the early months of the pandemic. But the specter of lockdowns also reappeared in October as the U.S. hit a daily global record with 100,000 new COVID-19 cases.
“Massachusetts companies in many sectors have continued to generate products and services through the ups and downs of the pandemic. But they realize that surging caseloads and the expiration of federal stimulus will slow the economy again as we move into the fourth quarter,” said Raymond Torto, professor at the Harvard Graduate School of Design and chair of the AIM Board of Economic Advisors (BEA).
One participant in the confidence survey noted that “there is a big divide between growth industries and industries such as travel and tourism, which continue to suffer.”
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.
The constituent indicators that make up the Index were mixed during October. Employer confidence in their own companies rose slightly to 49.3, nearly 10 points lower than in October 2019. The Massachusetts Index assessing business conditions within the Commonwealth lost 1.2 points to 42.9, while the U.S. Index measuring conditions nationally declined 2.4 points to 40.2.
The Current Index, which assesses overall business conditions at the time of the survey, was essentially flat at 44.0. The Future Index, measuring expectations for six months out, fell 1.8 points to 48.4.
The Employment Index increased 0.9 points to 49.5, just short of optimistic territory. Despite the COVID-driven economic downturn, many employers continue to report challenges with hiring skilled workers.
Small companies (46.6) were slightly more bullish than medium-sized companies (46.2) and large companies (45.8). Non-manufacturers (47.0) were more bullish than manufacturing companies (45.5).
Barry Bluestone, retired professor of Public Policy and Urban Affairs at Northeastern University, noted that the economy continues to be whipsawed by seemingly contradictory trends.
“More than 60,000 renter households in Massachusetts currently face the prospect of eviction, while, at the same time, the average price of a single-family home in Massachusetts surged 19.5% during September,” Bluestone said. “It mirrors what we see in the overall economy, where there is a clear disparity by industry in the consequences of the economic downturn.”
AIM President and CEO John Regan, also a BEA member, said the ability of Massachusetts to moderate the spread of COVID without repeating the devastating spring lockdown is essential to maintaining positive economic momentum.
“Hundreds of thousands of our friends and neighbors remain out of work, staring at bleak prospects during what is shaping up to be a long winter,” he noted, adding that the employers who make up AIM’s reopening task force, many of whom have operated as essential businesses throughout the pandemic, “continue to work closely with the Baker administration to ensure that the Commonwealth is able to balance public health and safety with economic survival.”