Massachusetts Business Confidence Flat in November

BOSTON — Business confidence remained essentially flat during November amid a softening labor market, cooling wage growth, and moderating inflation.

The Associated Industries of Massachusetts (AIM) Business Confidence Index lost two-tenths of a point to 51.0 last month, continuing its pattern of hovering near the dividing line between optimism and pessimism. The Index ended the month 7.7 points lower than the same time last year.

Steady employer sentiment in November reflected a Massachusetts economy that outperformed expectations by growing at a 3.8% annualized rate during the third quarter. Nationally, job growth was less than expected in October, while wage growth eased to 4.1% year over year.

“Strong consumer spending throughout the summer helped the U.S. and Massachusetts economies during a period in which the Federal Reserve has increased interest rates to moderate inflation. The hope is now that the economy will slow in a deliberate manner instead of falling into recession,” said Sara Johnson, chair of the AIM Board of Economic Advisors (BEA).

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, rose from 45.7 to 49.6. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, declined from 54.2 to 52.2. The Western Massachusetts Business Confidence Index, developed in collaboration with the Springfield Regional Chamber of Commerce, also lost ground, from 54.1 to 51.8.

The constituent indicators that make up the Index were mixed during November. The confidence employers have in their own companies gained 0.1 point to 52.0, ending the month 10.8 points less than in November 2022.

The Massachusetts Index assessing business conditions within the Commonwealth decreased 1.0 point to 52.6, leaving it down 3.6 points from a year earlier. The U.S. Index measuring conditions throughout the country ended the month at 46.4, which is 2.2 points lower than a year ago.

The bright spot of the November numbers was the Future Index, which gained 1.3 points to 51.4 as employers saw improvement ahead in the first six months of 2024. The Current Index, which assesses overall business conditions at the time of the survey, fell 1.6 points to 50.6.

The Manufacturing Index lost 0.6 point to 47.9, falling 8.4 points below its level of a year ago. Confidence among non-manufacturing companies was up 0.8 point to 52.9. The Employment Index fell 1.4 points to 48.7. Large companies (54.2) were more optimistic than medium-sized companies (51.7) and small companies (47.8).

Elmore Alexander, dean emeritus of the Ricciardi College of Business at Bridgewater State University and a BEA member, said the white-hot job market both in Massachusetts and nationally appears to be approaching equilibrium, reducing inflationary pressure on wages.

“The U.S. economy added 150,000 jobs in October, and job growth in August and September was revised down by a cumulative 101,000 jobs. The Massachusetts unemployment rate, meanwhile, rose to 2.8%,” Alexander noted.

AIM President Brooke Thomson, also a BEA member, confirmed that the association is seeing signs of wage moderation among its 3,400 members.

“The AIM HR Practices Survey to be published later this month will show that employers plan somewhat smaller wage increases in 2024 than in 2023,” she said. “Those projections are consistent with national trends: wage growth has been slowing steadily since March, and overall inflation cooled to 3.2% in October.”