Business Confidence Rises in April
Massachusetts employers grew more confident again in April, despite an economy slowed by inflation and geopolitical uncertainty during the first quarter.
The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.9 points last month to 58.1. The index has now risen for three consecutive months and sits comfortably within optimistic territory.
The increase reflected strengthening employer views about both the Massachusetts and U.S. economies, even though real GDP declined at an annual rate of 1.4% nationally and an estimated 1.0% in the state during the first quarter of 2022.
The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, showed Worcester County employers with a 56.9 confidence reading. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, was 61.8.
At the same time, tax collections in Massachusetts were $2 billion more than expected during April, pushing the state at least $3.5 billion ahead of its year-to-date benchmark with just two months left in the fiscal year.
“Massachusetts companies remain optimistic about the sustainability of the economic expansion even amid tightening financial conditions and uncertainties related to COVID-19 and the war in Ukraine,” said Sara L. Johnson, chair of the AIM Board of Economic Advisors. “Every element of the Business Confidence Index was in optimistic territory last month, with the highest reading for employers’ views about the prospects of their own companies.”
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 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.
The constituent indicators that make up the index were mostly higher in April.
The Massachusetts Index assessing business conditions within the Commonwealth jumped 1.7 points to 57.3, down 3.1 points since April 2021. The US Index measuring conditions throughout the country moved into optimistic territory at 53.1, up from 49.9 in March.
Employers are equally bullish about future business conditions and present ones. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.5 points to 58.1. The Future Index, measuring projections for the economy six months from now, gained 0.3 points to 58.0.
The confidence employers have in their own companies declined 0.2 points to 60.0, ending the month 1.6 points lower than in April 2021.
The Manufacturing Index increased 0.7 points to 56.3 for its third consecutive monthly gain. The Manufacturing Index now stands 3.2 points less than a year ago.
Small companies (60.0) were more optimistic than medium-sized companies (57.3) or large companies (56.7).
Alan Clayton-Matthews, Professor Emeritus of Economics and Public Policy at Northeastern University, senior contributing editor, MassBenchmarks and a BEA member, said the state and national economies continued to create jobs during the first quarter of the year.
“Massachusetts payroll employment in the first quarter grew at an annual rate of 5.2 percent, slightly faster than the 4.8% pace for the U.S.,” Clayton-Matthews said.
“Between the first quarter of 2021 and the first quarter of 2022 employment increased by 5.3 percent in Massachusetts and 4.6% in the U.S. However, in March 2022, the state remained 2.4% below pre-pandemic payroll employment levels, which peaked in February 2020.”