State Business Confidence Hits Pothole in April

BOSTON — The Associated Industries of Massachusetts Business Confidence Index dropped 1.1 points in April to 59.1, backing off from its post-recession high.

“In April, the snow finally melted, the sunlight got stronger, and Massachusetts employers were a bit more positive about current business conditions — but other concerns weighed more heavily,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at the Harvard Graduate School of Design. “The index’s decline is attributable to lower confidence among the state’s manufacturers, who confront both weak growth domestically and challenges in global markets due to the stronger dollar.”

As in 2014, Torto noted, the index performed well through a weak first quarter for the U.S. economy, which recorded a 0.2% growth rate.

“We think AIM members have confidence in the fundamental stability of business conditions,” he said. “Slow growth has caused survey respondents to temper their expectations, but they continue to foresee improving conditions ahead. The AIM Index is up 6.1 points from last April and 9.6 points over two years, reflecting a significantly better business climate in Massachusetts and nationally.”

The AIM Business Confidence 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.

Most of the sub-indices based on selected questions or categories of respondent declined from March to April, but all were up from a year before. The Massachusetts Index, assessing business conditions within the Commonwealth, shed 2.2 points on the month to 58.6, and the U.S. Index of national business conditions lost 1.7 points to 53.8.

“Despite the weak first quarter, the U.S. Index been above 50 for five consecutive months, and seems at last to be established in positive territory,” said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, a BEA member. “The Massachusetts Index continues to lead its national counterpart, and the latest MassBenchmarks Economic Index shows that the state’s economy has outperformed the nation’s so far this year.”