Employer Confidence Hits Another High for 2017
BOSTON — Employer confidence in Massachusetts hit another high for 2017 during October as economic growth accelerated and companies remained optimistic about the national outlook.
The Associated Industries of Massachusetts (AIM) Business Confidence Index edged up 0.3 points to 62.7, leaving it 6.5 points better than in October 2016. The uptick was driven by a brightening view of employment growth and firming confidence among manufacturers.
The reading came as MassBenchmarks reported that the Massachusetts economy grew at 5.9% during the third quarter, almost double the rate of the national economy. Payroll employment grew at a 2.1% annual rate in Massachusetts in the third quarter as compared to 1.2% nationally.
“The acceleration of the Massachusetts economy in the third quarter provided additional fuel to an already solid sense of confidence among employers as we head for 2018,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “At the same time, optimism about the national economy suggests that employers believe growth rates throughout the U.S. will increase even more if Congress follows through on its proposal to lower the corporate tax rate from 35% to 20%.”
The AIM Index, based on a survey of 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 Index has remained above 50 since October 2013.
The constituent indicators that make up the overall Business Confidence Index were largely higher during October. The Massachusetts Index, assessing business conditions within the Commonwealth, slipped 0.3 points to 65.1, still 4.1 points more than a year earlier. October marked the 91st consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy. The U.S. Index of national business conditions rose 2.7 points to 62.5, continuing a 13.3-point surge for the 12-month period.
The Current Index, which assesses overall business conditions at the time of the survey, increased 0.7 points to 63.6, while the Future Index, measuring expectations for six months out, remained even at 61.9 points. The Current Index has risen 7.6 points and the Future Index 5.6 points during the past year. The Company Index, reflecting overall business conditions, lost 0.3 points to 62.0. There was better news in the Employment Index, a key predictor of economic health, which rose 2.0 points to 57.8.
“The Massachusetts economy continues to grow at a robust pace and to add jobs in a broad array of sectors despite tightening regional labor markets. With the statewide unemployment rate now below 4%, it is not clear the Commonwealth’s economic expansion is sustainable at its current pace,” said Professor Michael Goodman, executive director of the Public Policy Center at UMass Dartmouth and a BEA member.
AIM President and CEO Richard Lord, also a BEA member, said employer optimism continues to be tempered by the prospect of three potentially destructive ballot questions appearing on the 2018 state election ballot.
“Massachusetts employers face an unprecedented public-policy crisis as activists seek to place three questions on the 2018 Massachusetts election ballot that would together impede economic growth for a generation: a surtax on incomes of more than $1 million, an expansive and bureaucratic paid-family-leave program, and an increase in the minimum wage,” Lord said. “Having just honored 16 Massachusetts employers for creating jobs and economic opportunity for the people of Massachusetts, AIM remains concerned about ballot questions that are clearly intended to be punitive toward employers.”