Employer Confidence Slips in August
BOSTON — Massachusetts employer confidence edged lower for the second consecutive month during August. The Associated Industries of Massachusetts (AIM) Business Confidence Index (BCI) shed 0.3 points to 61.2 last month, leaving it 7.1 points higher than a year ago. The Index has been essentially flat since April and now stands 0.2 points lower than at the beginning of 2017.
Last month’s slip reflected offsetting trends in employer attitudes about conditions inside and outside their walls. Employers grew less bullish about their own companies during the month, but showed growing optimism about the national economy and about prospects for manufacturers.
“Employer confidence continues to move in a narrow range defined by broad optimism about both the state and national economies,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “The steady level of confidence readings above the 60 mark reflect a state economy that grew at a 4% annual rate during the second quarter while maintaining a steady level of employment growth.”
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. It has remained above 50 since October 2013.
The constituent indicators that make up the overall Business Confidence Index were mixed during August. The Massachusetts Index, assessing business conditions within the Commonwealth, remained unchanged at 63.2, still 6.3 points higher than in August 2016. The U.S. Index of national business conditions rose 2.3 points to 60.2 amid strong signs of job expansion nationally. The U.S. Index has risen 10.6 points during the past year, more than any other element of the overall Business Confidence Index.
Still, August marked the 89th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.
The Current Index, which assesses overall business conditions at the time of the survey, edged up 0.1 points points to 61.3, while the Future Index, measuring expectations for six months out, dropped 0.6 points to 61.2. The Future Index ended the month 6.3 points higher than a year ago.
The Company Index, reflecting overall business conditions, lost 1.3 points to 60.9. The Employment Index surged 2.3 points to 58.0 after losing ground during July. Confidence was also remarkably consistent across all geographic regions of the Commonwealth. Eastern Mass. companies posted a 61.3 reading during August versus 61.1 for companies in Western Mass.
AIM President and CEO Richard Lord, a BEA member, noted that a significant number of employers who responded to the August survey expressed frustration with the new $200 million health-insurance surcharge and the proliferation of complex and expensive employment laws.
“Amid a generally strong economy, employers feel under siege from a government and an electorate that seem willing to impose crushing financial burdens on job creators in the name of social progress,” Lord said. “Employers are telling us that additional measures that may be headed to the statewide ballot — paid family leave, a $15 minimum wage, and a punitive surtax on incomes of more than $1 million — may force them to relocate.”