Employer Confidence Rises at Year End

BOSTON — Massachusetts employers rang out 2019 on an optimistic note as business confidence rose to its highest level in 15 months.

The Associated Industries of Massachusetts (AIM) Business Confidence Index gained 1.6 points to 62.2 last month, leaving it comfortably within optimistic territory and 3.6 points higher than a year ago. The strong year-end results were driven by brightening views of the U.S. economy and an increasingly bullish outlook among Bay State manufacturers.

The results came during a month when the U.S. economy created 145,000 jobs to cap a decade of payroll gains that marked the longest growth period in 80 years of record keeping. December also saw an easing of the international trade tensions that had disquieted employers for much of 2019.

“Business confidence remained steady and strong throughout 2019 as employers saw underlying strength in the economy through sometimes distracting political uncertainties,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA).

The AIM Index, based on a survey of more than 100 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 Business Confidence Index moved mostly higher in December. The U.S. Index assessing business conditions nationally surged 3.6 points during the month and 7.7 points for the year to 62.8. The Massachusetts Index lost 1.8 points in December but remained higher than the national reading at 65.2

The Future Index, measuring expectations for six months out, gained 2.1 points to 61.6, leaving it 4.3 points higher than a year ago. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.1 points to 62.8, an increase of 2.8 points over 12 months.

The Employment Index was up 0.9 points in December and 1.0 points for all of 2019 amid a persistent shortage of workers that may become worse as large number of Baby Boomers retire.

Non-manufacturers (63.2) were slightly more confident than manufacturing companies (61.4). Large companies (65.2) were more optimistic than small (61.7) or medium-sized (60.5) companies. Companies in Eastern Mass. (62.7) remained more optimistic than those in Western Mass. (61.6).

AIM President and CEO John Regan, a BEA member, said employers face an eventful 2020 as state policymakers wrestle with major issues such as transportation financing, health reform, and the implementation of paid family and medical leave.

“The Baker administration and the Massachusetts Legislature have done a commendable job managing the state budget while maintaining an environment of economic growth,” he noted. “The decision to allow the MassHealth employer assessment to sunset indicates that lawmakers understand that overburdening business will ultimately constrict economic opportunity.”