AIM Business Confidence Index Slumped in May
BOSTON — The Associated Industries of Massachusetts (AIM) Business Confidence Index dropped 4.4 points in May to 51.7 as state employers confronted a slowing economy and continuing uncertainty about the course of recovery. “The results mirror the national news,” said Raymond Torto, global chief economist at CB Richard Ellis Group Inc., the chair of AIM’s Board of Economic Advisors (BEA), in a statement. “A series of economic reports is telling us what AIM members were seeing in mid-May — disappointing growth and job creation, weakness in manufacturing and real estate, and declining consumer confidence locally and nationally, along with renewed turmoil in the euro zone and its impact on financial markets.” The economy, Torto added, “as we’ve often noted, is getting better but remains far from healthy, so it will be subject to relapses like this. The factors at work now are very similar to those that produced a dip in confidence last spring, with some added concerns about East Asia.” AIM’s Business Confidence Index, issued monthly since July 1991, uses a 100-point scale to judge business conditions, with 50 as neutral. Its historical high was 68.5, attained in 1997 and 1998; its all-time low was 33.3 in February 2009. “The index has been in positive territory for the past eight months, and it is up 12.7 points over two years, with most of its gain in late 2009 and early 2010,” Torto noted. “The economy, though clearly in stronger and more stable condition than it was in 2009, has yet to achieve sustained, robust growth.” All of the sub-indices based on selected questions or respondent characteristics gave ground in May along with the main index. The Massachusetts Index of business conditions prevailing within the Commonwealth dropped 1.5 points to 48.2, while the U.S. Index of national conditions fell 1.6 to 44.3. Since March 2010, the state indicator was ahead 4.1, and its national counterpart up 3.0 points. The Current Index of conditions prevailing at the time of the survey was off 4.2 points at 49.7, while the Future Index of expected conditions six months ahead lost 4.5 to 53.7. The Company Index, which measures survey respondents’ overall confidence in the situations of their own operations, dropped 6.6 points in May to 54.7. The two other company-specific sub-indices also fell, the Sales Index by 6.8 to 54.1 and the Employment Index by 6.0 to 51.9. Confidence was off among both manufacturers (-3.2 to 54.6) and other employers (-5.5 to 47.7); it also fell both in Greater Boston (-3.6 to 43.0) and outside the metropolitan area (-6.5 to 49.0). There was no clear pattern of responses by size of company. The monthly Business Confidence Index is based on a survey of AIM member companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as respondents’ own operations. On the Index’s 100-point scale, a reading above 50 indicates that the state’s employer community is predominantly optimistic, while a reading below 50 points to a negative assessment of business conditions. A number of component sub-indices are derived by analyzing responses to selected questions or those of particular groups of respondents.
State Leading Growth Rate
BOSTON — The U.S. International Trade in Goods and Services report by the Commerce Department’s U.S. Census Bureau and the U.S. Bureau of Economic Analysis recently showed that U.S. exports of goods and services in April 2011 increased 1.3% from March 2011 to a record $175.6 billion, with record exports of both goods ($126.4 billion) and services ($49.1 billion). The monthly export values for U.S. industrial supplies ($43.4 billion) and capital goods ($41.0 billion) was also the highest on record. U.S. imports of goods and services decreased 0.4% over this period to $219.2 billion, causing the U.S. trade deficit to decline 6.7% below March figures to $43.7 billion in April. “Over the past six months, the economy has added more than a million private-sector jobs, and exports — boosted by the president’s National Export Initiative — are helping us do that,” said U.S. Commerce Secretary Gary Locke in a statement. “President Obama announced several new commitments that will help 500,000 young Americans get the credentials they need to succeed in the manufacturing industry. Preparing Americans for good-paying jobs in the manufacturing sector will not only strengthen the economy and put people back to work, but will help us compete in today’s 21st-century global economy.” Locke noted that April is the second consecutive month of record export growth, and while there may be bumps on the road to recovery, he added that the administration is making the economy more competitive by fostering new jobs in new industries, and helping to educate and train workers to fill them. In Massachusetts, the state’s economy grew 4.2% in 2010, ranking it fourth in the nation in economic growth, according to the Commerce Department. The technology and health care industries have fueled the state’s growth, allowing Massachusetts to recover faster than the nation as a whole. Across the region, Vermont ranked second after Massachusetts with 3.2% growth, followed by Connecticut with 3.1%, Rhode Island with 2.8%, Maine with 2.1%, and New Hampshire with 1.3%.