Business Confidence Falls Again in October

BOSTON — Business confidence in Massachusetts slid for a second consecutive month in October as employers confronted disruptions from the federal government shutdown, rising prices, and continued uncertainty about tariffs.

The Associated Industries of Massachusetts (AIM) Business Confidence Index declined 1 point to 46.5 on a 100-point scale. It marked the eighth consecutive month that the Index remained below the 50-reading separating optimism from pessimism.

The October index was nine points less than the same month a year ago. The last time the BCI remained in pessimistic territory for eight months was during the COVID-19 pandemic in 2020.

Meanwhile, the federal government shutdown is hindering analysis of the economy since federal agencies have suspended collection and processing of most official statistics.

“The economy remains resilient with the Federal Reserve noting that economic activity ‘has been expanding at a moderate pace.’ At the same time, the labor market is softening — employment has decelerated, and long‐term unemployment has risen. Because the labor market is a major pillar of consumer spending, any sign of widening job losses or weakening wage gains would be a red flag,” said Sara Johnson, chair of the AIM Board of Economic Advisors (BEA), which oversees the Index.

The constituent indicators that make up the Index were mostly lower in October. The confidence employers maintain in their own operations fell 1.5 points to 50.3. That figure was 6 points less than in October 2024.

The Massachusetts Index, assessing business conditions within the Commonwealth, gained 0.6 point to 43.3, leaving it 10.9 points lower than a year earlier. The U.S. Index measuring conditions throughout the country dropped 1.3 points for the month and 16.2 points for the year.

The Current Index, which assesses overall business conditions at the time of the survey, lost 2.3 points to 46.3. The Future Index predicting conditions six months from now rose 0.2 point to 46.7.

The Manufacturing Index edged down 0.2 point to 45.7, leaving it 4.8 points lower than the year earlier. The Employment Index saw the largest decline for October, shedding 4.1 points to 48.5.

Large companies (52.0) were more confident than medium-sized companies (43.5) and small companies (43.0).

Alan Clayton-Matthews, professor emeritus of Economics and Public Policy at Northeastern University and a BEA member, said the high productivity rate that has traditionally allowed Massachusetts to increase economic output now faces challenges from changes in federal policy. “Tariffs and reductions in research and development spending create issues for productivity, while an aging demographic affects labor force participation, and tightening immigration policy affects population.”

AIM President and CEO Brooke Thomson, also a BEA member, recently testified before the Massachusetts Legislature in support of Gov. Maura Healey’s proposed DRIVE Act that would invest $400 million to grow Massachusetts’ research and innovation economy.

“The DRIVE legislation sends a strong message that Massachusetts is committed to continuing our path as the global leader in innovation, research, and education,” Thomson said. “DRIVE would also provide much-needed stability for the network of small companies, manufacturers, and service providers that form the backbone of the Massachusetts life-sciences miracle.”