Employer Confidence Surges During May
BOSTON — Business confidence surged during May to its highest level since the summer of 2000, driven by improving employer outlooks about the state and national economies.
The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 2.4 points to 66.6 last month after increasing modestly during April. The BCI has risen in five of the last six months and now stands 5.8 points higher than its level a year ago.
Confidence remains well within the optimistic range. The only whiff of concern came in the index that measures hiring, which dropped 1.5 points for the month and 0.2 points during the year. Economists believe the weakness in the AIM Employment Index reflects the persistent shortage of workers in Massachusetts that has forced some employers to postpone expansions or to decline new business opportunities.
Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design, cautioned that major month-to-month movements in the Index like those in May sometimes reflect statistical or sampling anomalies. He noted, however, that the numbers are consistent with a general sense that the U.S. and state economies are picking up steam in the second quarter after a slow start to 2018.
“There are signs GDP growth gathered momentum early in the second quarter, with solid consumer spending, business investment on equipment, and industrial production,” Torto said.
The nation’s economy grew at a 2.2% rate during the first quarter. Hiring across the U.S. remains strong, with the government reporting on Friday that employers added 223,000 jobs during May.
“The Massachusetts economy continues to operate at virtually full capacity, creating significant constraints on the availability of labor,” Torto said.
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.