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Forecast Is Strong for 2017, but Questions Loom on the Horizon

outlookdpartAfter six years of largely uninterrupted economic growth in both Massachusetts and the U.S. as a whole, questions have arisen as to how long the expansion can last, especially coming on the heels of an unusual election season and amid sluggish economic trends internationally. The consensus seems to be that the present course should hold in 2017, but also that recessions are a regular occurrence in the American economy, and it wouldn’t take much to spark a slowdown. For now, though, cautious optimism reigns.

Rarely, economists note, does the U.S. economy grow for a full decade without hitting a recession. So the continuing strength of the economy — reflected most notably in falling unemployment — is a mixed bag of news. In short, while the growth is welcome, some caution is warranted.

“At the state and national level, the recovery has been going on for six years, and while there are no hard-and-fast rules about this, we could expect some moderation after six years of growth,” said Karl Petrick, assistant professor of Economics at Western New England University. “Every year of growth makes it more likely that the downward part of the business cycle is closer.”

Karl Petrick

Karl Petrick

Because of both economic and political reasons, I think the state economy is entering into a period of more uncertainty. Luckily, we are doing so after a period of robust economic growth, so, as a state, we have a good foundation to weather this uncertainty.”

 

 

A year ago, Bob Nakosteen, professor of Economics at the Isenberg School of Management at UMass Amherst, called the economic outlook “fuzzy,” but said last week that 2016 solidified into a positive year on many fronts.

“Growth statewide has been somewhat modest, but continuous; we haven’t seen the unemployment rate this low since 16 years ago, the turn of the century,” said Nakosteen, who is also co-editor of MassBenchmarks, the quarterly publication devoted to analysis of the Bay State’s economy. “I don’t think the economy is going gangbusters, but it’s been steady, moderate growth over a long period of time, with higher employment numbers and the total number of workers higher.”

Slowly and steadily, if not spectacularly, he went on, the economic outlook since the low point of the Great Recession has morphed into a remarkable period of expansion. In Massachusetts, the main drivers include the usual suspects, such as information and communications technology, healthcare, and education. “These are industry sectors that are in high demand both nationally and globally, and we have the good luck, at least in the recent past, to have a heavy dose of those sectors. Any time there’s a big demand in the national economy for the services and industries we specialize in, it’s going to help us, and that’s what’s happening.”

PeoplesBank’s Tom Senecal (left) and Mike Oleksak

PeoplesBank’s Tom Senecal (left) and Mike Oleksak say indicators like rising employment and fewer foreclosures point to a strengthening economy.

Massachusetts, Petrick noted, has outpaced the national rate of growth since 2008.  For example, the state’s economy expanded at an annual rate of 3.7% in the third quarter of this year, while the national annualized rate of growth was 2.9% during that same period.

A similar trend holds in the category of unemployment rate. In October 2016, the last month for which state data is available, the Bay State’s unemployment rate was 2.7%, compared to the U.S. unemployment rate of 4.9%.

But is unemployment falling because more people are finding jobs, he asked, or because people are leaving the labor force and aren’t being counted? Comparing October 2016 to Oct 2015, the labor force grew while the unemployment rate fell (from 4.5% in Oct 2015 to 2.7% in Oct. 2016). While that’s a sign of success, one result is a tightening job market.

“The unemployment rate is falling for the right reasons, but it does also signal that it will be harder to keep up the pace of economic growth that we have been experiencing as the labor market gets tighter,” he told BusinessWest. “Effectively, it will be harder for those who are unemployed to find work.”

Meanwhile, the 2.7% number doesn’t tell the whole story. The official (U3) unemployment rate, the one that gets reported, counts anyone who is either working or willing to work, defined as someone who has looked for a job in the past four weeks, he explained. A broader measure of unemployment is the U6 rate, which includes workers who have given up looking for work but would return to the labor force if jobs were available, as well as people who are employed part-time because they can’t find a full-time job. The average U6 number in Massachusetts is 8.8%.

“The difference between that and the state U-3 rate does indicate that there is potentially more room to grow in Massachuetts,” Petrick said. “That’s a lot of potential workers that are on the sidelines who could return to the labor market if things continue to improve.”

Whether the economy will, indeed, continue to improve is the big question.

East and West

Petrick and Nakosteen both noted that breaking the state down by region results in a much more mixed picture for Western Mass.

Specifically, while Hampden County’s U3 rate fell from 6.0% to 3.6% from October 2015 to October 2016 — and similarly decreased from 8.3% to 5.1% in Springfield and 7.4% to 4.3% in Holyoke — those figures trail other metro areas in Massachusetts, including Boston (2.6% in October 2016) and Worcester (3.3%). In fact, Springfield’s 5.1% rate ranks among the highest city unemployment rates in the state.

“The recovery started sooner in Eastern Mass., and it took a while for the effects to be really felt in the western part of the state,” Petrick said. “Over the past year, we have seen a degree of catching up … after lagging in Western Mass. for a few years, the rate of job growth is now pretty consistent across the state.”

One interesting result over the past year, he noted, has been a rebound in the construction industry in Massachusetts, which saw employment grow by almost 38%. But much of that growth — particularly new construction — has been concentrated in the Greater Boston area.  Still, he went on, as construction was hard-hit by the recession, a rebound in this sector is a positive sign.

Bob Nakosteen

Bob Nakosteen

I don’t think the economy is going gangbusters, but it’s been steady, moderate growth over a long period of time, with higher employment numbers and the total number of workers higher.”

 

“It’s always been the case that the growth in Boston spreads very unevenly, and it dissipates as it gets farther from Boston,” Nakosteen added. “In Western Massachusetts, our employment numbers have increased, but not dramatically.”

One oft-discussed reason has been the decline of the manufacturing base over the past few decades, with no one industry stepping up to replace it. “We have a smattering of everything, and a number of manufacturing companies, but nothing very big.”

Area economic-development leaders hope the emergence of CRRC USA Rail Corp., a subsidiary of the China-based world leader in rail-car manufacturing — which promises to create more than 150 manufacturing jobs in Springfield when its plant on Page Boulevard opens in 2018 — is a harbinger of more good news for the region’s manufacturing sector. At the same time, downtown projects like Union Station and MGM Springfield, coupled with a surge in entrepreneurial activity in the region, bode well for the future.

So do the continued health of the ‘eds and meds’ sectors in the region. Nakosteen noted that people think of Massachusetts’ world-class hospitals when they think of the state’s healthcare prowess, but in addition to that anchor, companies that perform pharmaceutical research and build medical devices are thriving — although, again, mainly in the eastern part of the state.

Still, he went on, “there has been some convergence of the economic prospects of the eastern and western parts of the state, and that’s a good thing.”

Nancy Creed, president of the Springfield Regional Chamber, said her organization’s members are mainly bullish on the year ahead.

“There’s a lot of optimism. I hear it on the streets and in chamber meetings,” she said. “We’re seeing new business come into the city — small businesses, especially, that want to be part of what’s happening here. And the chamber is growing — chamber members are increasing job growth, increasing spending. I think, overall, people are feeling good about the city of Springfield.”

Nancy Creed says businesses expect to grow in 2017

Nancy Creed says businesses expect to grow in 2017, despite caution over what national events and trends represent.

However, “I would say it’s also tempered with what could potentially happen with the new federal administration,” she added. “Who knows what’s going to happen with healthcare and the ACA? So there’s also some caution overall.”

Indeed, Petrick noted, markets don’t like uncertainty, and they tend to be volatile during an election year in the U.S. — particularly one as unpredictable and unusual as the one that gave rise to President-elect Donald Trump and his aggressive rhetoric regarding trade.

“Certainly two of our biggest trade partners at the national level, China and Mexico, have both responded by letting us know that a trade war is a very bad idea for the U.S. as well as for them,” he said. “They have also both let the incoming administration know that there’s not a whole lot of good will there after a series of inflammatory statements regarding both countries during the campaign.

Those relationships need mending, he said, and it’s in the interest of both the U.S. and Massachusetts economies for that to happen. At the national level, he noted, much uncertainty lingers — more than what is typical after an election — and both companies and consumers want to see what the incoming administration will do, particularly after so many statements, many of them contradictory, regarding potential policy.

“So, because of both economic and political reasons, I think the state economy is entering into a period of more uncertainty,” Petrick said. “Luckily, we are doing so after a period of robust economic growth, so, as a state, we have a good foundation to weather this uncertainty.”

In the financial world, indicators reflect general economic health, said Thomas Senecal, president and CEO of PeoplesBank.


List of Business and Economic Development Resources


“Interest rates, obviously, drive most of what we do,” he said, adding that the Fed is expected to raise rates another 25 basis points this week, and he anticipates further jumps in the spring and perhaps the fourth quarter of 2017. “We see it as a moderate increase in rates that won’t have a huge, detrimental effect.”

In fact, he added, the Fed moves should instead translate into positive consumer confidence, which usually brings positive economic impact.

Meanwhile, Senecal added, “unemployment is significantly down in Western Mass., and we see in the banking industry that foreclosures are down, delinquencies are down — these are all positive signs for the economy.”

Broader Trends

Other fundamentals at the national level remain positive, Petrick said. The International Monetary Fund (IMF) estimates that the U.S. economy will grow by 2.2% over the next year. That’s a strong rate of growth, although one part of the IMF forecast — higher energy prices — is better for some states (like Texas and North Dakota) than for Massachusetts. The IMF also estimate that the U.S. dollar will weaken over the coming year, which is good news for exports from Massachusetts, as a strong dollar over the past two years has seen state exports to many top trade partners suffer.

While the national economy is still growing, Nakosteen noted, it’s growing at a slightly slower rate than in previous years, and that’s bound to affect Massachusetts. “We can only be healthy to the extent of a strong national economy.”

Meanwhile, globally, China continues its transformation from an export-led economy to one more consumer-driven, and that could be a painful process. “It’s not clear that transition will be successful or happen any time soon,” he said, “and it’s not clear the politics in that country will be able to sustain it.”

As for Europe, “what they consider good news, we’d call stagnant. We’d be lamenting it here, but they’re happy there. There’s not much in the tea leaves to say that will change any time soon,” Nakosteen said, adding that slowdowns in commodities exports — a problem from Asia to Africa to Canada — are proving to impact economies negatively as well.

“The world isn’t on the brink of anything, but it’s certainly challenged in a number of ways, and certainly just slogging along,” he said. “We’re not disconnected from any of that. Even though we have a really dynamic economy, these trends are bound to suppress growth at some point. We’ve managed to keep modest growth continually for a long time, but there are troubling outside signs.”

Petrick agreed. “A generally sluggish world economy doesn’t help the U.S. or the Massachusetts state economy. The weakened Chinese economy, a sluggish European Union, and the continued fallout from the Brexit vote in the UK all bear watching.”

Michael Oleksak, executive vice president, senior lender, and chief credit officer at PeoplesBank, noted, as many analysts have, that Western Mass. is to some degree more shielded from national trends than, say Boston — never reaching the same heights or plumbing the same depths.

“The last few years, we’ve seen positive trends for both our customers and prospective customers,” he said, adding that he sees some staying power in regional trends like rising household incomes, strong commercial occupancy levels, and an uptick in home purchases in the mortgage realm after several years of refinances dominating that sector. Meanwhile, he sees the casino and other large projects causing a trickle-down effect of renewed investment interest in the region.

“I think the casino and CRRC will have an impact on the Western Mass. market; there will be some economic spilloff from that,” Senecal added. “Any time you see cranes in the sky, it makes you feel good about what’s going on in the immediate area.”

Meanwhile, some sectors are dealing with trends that are more cultural than economic, notably retail, which continue to grapple with Internet sales cutting deeply into their bottom line. Nakosteen said he has talked to store owners who say they hear that things are getting better, but they’re not seeing it themselves. “Retailers across the state and nation are struggling to deal with the Internet world.”

Bottom Line

In summary, Petrick expects Massachusetts’ economic growth to remain positive in 2017 but at a slower rate, closer to the U.S. national rate of growth.

“It’s really hard to continually outpace the national rate of growth after so many years of doing so,” he said. “I suspect, for at least part of the year, we will grow faster than the national average, but the gap will get narrower.”

One advantage the Bay State has is a high percentage of educational attainment, as 41.5% of residents in age 25 or older have a bachelor’s degree or higher; the national rate is 30.6%. “That is one of the reasons that Massachusetts is an attractive place for companies to locate.”

On the other hand, they still grapple with skills gaps, trying to match their needs with the available talent. But one of the more positive stories over the past decade in Western Mass. has been the region’s efforts to attack that problem.

“The skills gap is always going to be a concern, as businesses evolve and have different needs,” Creed said, adding, however, that the city has been fortunate to see robust partnerships emerge between its colleges, technical schools, and workforce-development agencies to prime the pump of talent and keep it in the region. “That’s the nature of the beast — businesses evolve, the skills they need evolve, and we’ve got to keep pace with that.”

Those partnerships don’t happen everywhere and shouldn’t be taken for granted, she added — but they are being noticed by both local companies and those looking for a place to plant new roots.

“I hear it from people at my events — they want to be downtown, they want to be part of the excitement. They want to be part of what’s happening here.”

It’s an optimism being felt across Western Mass. — admittedly, more strongly in some communities than others — as the calendar turns to 2017, and all the economic questions a new year brings.

Joseph Bednar can be reached at [email protected]

Briefcase Departments

Employer Confidence Falls for Third Consecutive Month

Confidence among Massachusetts employers fell for a third consecutive month during August as companies remained uncertain about the vigor and durability of the economic recovery.
The Associated Industries of Massachusetts Business Confidence Index (BCI) declined one point to 54.1 last month, leaving it three full points lower than in August 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed sharply on current economic conditions and employers’ outlook on their own companies. The employer confidence readings are consistent with a recent weakening of consumer confidence in Massachusetts. The Mass Insight Consumer Confidence Index slid 10 points during the third quarter. “The national and state economies continue to improve, but without the kind of momentum we have seen in previous recoveries. So employers remain confident overall, but circumspect,” said Raymond G. Torto, Chair of AIM’s Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design. “One potential red flag is the degree to which employer confidence in their own companies has weakened during the past several months.” 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.

More Than 1,100 Volunteer for Annual Day of Caring

PIONEER VALLEY — On Sept. 9, the United Way of Pioneer Valley launched its annual fund-raising campaign with the Day of Caring, when more than 1,100 volunteers from more than 40 area businesses volunteered across the region to help local nonprofits. Starting with a kickoff breakfast in Court Square in downtown Springfield, participants traveled to towns across the Valley, contributing in myriad ways to support programs and organizations that support the community. Projects included lawn work, painting projects, light construction, gardening, and trash removal. The day was ideal for team building, but it was also a chance for both nonprofits and area businesses to learn more about each other’s work. “I participate in the Day of Caring because I believe that giving back to the community is a central part of promoting unity,” said Sharon Dorsey, an executive assistant from Health New England. “The past few years I participated in the Day of Caring, I loved seeing how appreciative and grateful the beneficiaries were.” This year’s Day of Caring sponsors included Baystate Health, MassMutual, Health New England, Comcast, Excel Dryer, UTC Aerospace Systems, IAMAW Local 743, Harry Grodsky & Co., Mestek Inc., Monson Savings Bank, PeoplesBank, Peoples United Bank, Quabbin Wire & Cable Co., TD Bank, Gulf Stream, the Springfield Community Music School, and Sodexo.

Springfield Regional Chamber Debuts New Dental Benefit

SPRINGFIELD — The Springfield Regional Chamber has teamed up Altus Dental to offer to its chamber members a new employee benefit to enhance their employee-compensation package. Administered through American Benefits Group, dental insurance provided by Altus Dental is now available for companies with as few as one employee. Altus Dental offers the state’s largest preferred-provider (PPO) dental network with more than 6,200 participating locations in Massachusetts, Rhode Island, and Southern New Hampshire, and national access through CONNECTION Dental, with more than 108,000 dentist locations nationwide. Three coverage options are available at competitive rates. Plus Plan 1 is basic coverage available to employers with one or more participating employees. Plus Plan 2 is an enhanced coverage option available to those with 10 or more participating employees, and Plus Plan 3 is an enhanced coverage option for companies with 20 or more participating employees. Each option includes 100% diagnostic and preventative services with no deductible, 80% for basic restorative care with a $50 single or $150 family deductible, and a low benefit maximum per year. Plus Plan 2 and Plus Plan 3 include major restorative care such as crowns and dentures. Plus Plan 3 includes orthodontic services. To be eligible, a business must be a member of the Springfield Regional Chamber and contribute at least 50% of the monthly premium. Coverage is open to active, full-time employees.

ServiceNet Wins Grant to Boost Work with Homeless Individuals

NORTHAMPTON — To further combat the continuing challenge of homelessness in communities across Western Mass., ServiceNet’s Shelter & Housing division has been awarded a three-year grant, totaling $1.2 million, by the Substance Abuse and Mental Health Services Administration (SAMHSA) of the U.S. Department of Health and Human Services. Returning Home, the program funded by this grant, is specifically focused on the needs of chronically homeless individuals and homeless veterans who also have a serious mental illness and/or substance-use disorder. The SAMHSA grant is one of 30 recently awarded nationwide, and it is the only one awarded in Massachusetts. Returning Home has a two-fold goal: to successfully move individuals from homelessness to permanent housing, and to improve their overall health and well-being. It does so through a combination of intensive case-management services and evidence-based clinical care. Increased funding will enable ServiceNet to assist an additional 112 individuals in the three-year period, and to expand its community outreach to meet with people on the streets, in outdoor camps, and elsewhere in the community. Returning Home will accept referrals from service providers throughout Berkshire, Franklin, and Hampshire counties, as well as from ServiceNet’s own network of emergency shelters.  “This award reflects SAMHSA’s trust in the outstanding work our team has done to date in housing individuals who are chronically homeless,” said Jay Sacchetti, ServiceNet’s vice president of Shelter & Housing, Vocational, and Addiction Services. “We are proud of the work they do, and this funding further stabilizes and preserves our Returning Home program.” Sacchetti also cited ServiceNet’s longstanding commitment to applied research as an advantage in securing the national grant. “When we say something works, we have the data to prove it; and when something doesn’t work, we understand why,” he said. “Our research team will continue to track the impact of Returning Home’s expanded services as we move forward.” ServiceNet is partnering with the Hilltown Community Development Corp. — administrator of the federal continuum of care which oversees area initiatives related to homelessness — to serve as steering committee for the grant. “This grant is going to help a lot of people a lot,” said Jack Tulloss, a former Marine and now clinical case manager with ServiceNet’s Shelter and Housing division. Increased case-management efforts will be underway by Oct. 1.

State Awards $2.4 Million in Workforce-training Grants

BOSTON — The Baker-Polito administration awarded more than $2.4 million in workforce-training fund grants to 25 companies to train current or newly hired workers. This round of grant funding will help train 2,162 workers, and is expected to create 263 new jobs. “We have made workforce development a priority for Massachusetts residents to get the skills they need to prosper and for companies to have a talented pool of workers to expand,” said Gov. Charlie Baker. “The training and career-building skills provided by these investments will help bolster economic prosperity and success throughout the Commonwealth.” The Workforce Training Fund assists Massachusetts businesses in becoming more competitive by investing in the skills of their workers. The Workforce Training Fund is also a key resource to thousands of Massachusetts workers who wish to advance their skills to achieve promotional opportunities and higher wages. It also acts as a catalyst for job creation. “The Workforce Training Fund is a vital tool for many companies to upgrade employees’ skills and increase productivity,” Lt. Gov. Karyn Polito said. “The training helps both the workers and the companies compete in a global environment.” The Workforce Training Fund provides grants of up to $250,000 to companies in Massachusetts, to pay for workforce training over a two-year period. Grants are awarded to projects that will upgrade workers’ skills, increase productivity, and enhance the competitiveness of Massachusetts businesses. Grants are matched dollar-for-dollar by the award recipients. The Workforce Training Fund is a program of the Executive Office of Labor and Workforce Development and administered by Commonwealth Corp., a quasi-public state agency that fosters partnerships between industry, education, and workforce organizations to strengthen skills for youth and adults in order to help them thrive in the state’s economy. Locally, Freedom Credit Union in Springfield was awarded $126,175 to train 133 workers. Meanwhile, the Massachusetts Manufacturing Extension Partnership was awarded $151,016 to train 93 workers, with nine additional jobs expected by 2018. This grant was awarded to a consortium of businesses, including Universal Plastics Corp. of Holyoke, Advanced Welding of Springfield, Duval Precision Grinding of Chicopee, Metronic of Chicopee, and Millitech Inc. of Northampton.

Study Details Spending of Consumer-driven Health Plan Enrollees

WASHINGTON, D.C. — People with consumer-driven health plans (CDHPs) had lower total per-capita spending on healthcare, driven in part by using less healthcare overall, than people with traditional non-CDHP commercial health plans, finds a new study from the Health Care Cost Institute (HCCI). At the same time, spending out of pocket by CDHP consumers was 1.5 times higher on average than non-CDHP consumers. For example, people enrolled in consumer-driven health plans paid an annual average $58 more out of pocket on visits to the doctor and $50 more on emergency room visits than their non-CDHP counterparts, while using roughly 8% and 10% fewer visits, respectively. The study, “Consumer Driven Health Plans: A Cost and Utilization Analysis,” examines healthcare use and spending from 2010 to 2014 for people covered by employer-sponsored insurance and under 65 years of age who are enrolled in CDHPs. Enrollment in CDHPs has been steadily increasing within HCCI’s employee-sponsored insurance population; more than one-quarter had a CDHP in 2014, compared to just 15% in 2010. Overall, the study found that that fewer total dollars were spent on healthcare for people with CDHPs, in part because people with CDHPs tended to use fewer healthcare services. However, people with CDHPs had higher spending out of pocket on deductibles, co-pays, and co-insurance (excluding premiums). This higher out-of-pocket spending meant people enrolled in CDHPs were responsible for nearly one-quarter of their medical costs on average, compared to 14% for those enrolled in non-CDHPs. “As the costs of healthcare increase, consumer-driven health plans try to balance lower premiums with higher deductibles and higher limits on out-of-pocket spending,” said HCCI Senior Researcher Amanda Frost. “As these types of plans grow in prevalence, it is important to look beyond premium dollars and also consider dollars spent directly on healthcare services.”

Briefcase Departments

Springfield Wins Grant from
U.S. Department of Justice

SPRINGFIELD — U.S. Rep. Richard Neal and Springfield Mayor Domenic Sarno recently announced that the city of Springfield has received a grant from the U.S. Department of Justice (DOJ) in the amount of $147,456 to expand communications and technology at the Springfield Police Department, and to increase officer safety and efficiency. The funds were awarded through the Edward Byrne Memorial Justice Assistance Grant (JAG) Program, the primary provider of federal criminal justice assistance to state and local governments. The JAG funds support for a range of program areas, including law enforcement, drug treatment, victim and witness initiatives, and technology-improvement programs. “This important crime-prevention assistance for the city is timely and needed,” Neal said. “I have always said the men and women of the Springfield Police Department deserve the appropriate amount of local, state, and federal resources they need to do their jobs effectively. Each day, they put their lives at risk to protect families and keep our community safe. With these additional funds, they will be able to continue to do their vital and courageous work on the streets of Springfield. In my opinion, Mayor Sarno and Commissioner Barbieri deserve great credit for their efforts to secure this highly competitive grant.” Added Sarno, “Police Commissioner John Barbieri is always looking to do cutting-edge innovative technology initiatives which in turn will continue to enhance the public safety of each and every one of our residents in the city of Springfield. These funds will assist with improving the technology needed to make the Springfield Police Department more efficient and effective in serving the residents of our fine city.” According to the DOJ, the Edward Byrne Memorial Justice Assistance Grant Program allows states and units of local government to prevent and control crime based on their own state and local needs and conditions. Grant funds can used for state and local initiatives, technical assistance, training, personnel, equipment, supplies, contractual support, and information systems for criminal justice, including for any one or more of the following areas: law-enforcement programs; prosecution and court programs; prevention and education programs; corrections and community-corrections programs; drug-treatment and enforcement programs; planning, evaluation, and technology-improvement programs; and crime victim and witness programs (other than compensation). The Springfield Police Department will use the award funds to support information-technology upgrades and purchase protective equipment. The use of this federal assistance meets unfunded needs and expands communications and technology capacity and increases officer safety and efficiency.

Employer Confidence Falls
for Second Straight Month

BOSTON — A resurgent U.S. stock market, better-than-expected job growth, and growing labor-force participation failed to make believers of Massachusetts employers during July as business confidence fell for a second consecutive month. The Associated Industries of Massachusetts (AIM) Business Confidence Index declined one point to 55.1 last month, leaving it more than four full points lower than in July 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed across the board on employment, the Massachusetts economy, and employers’ outlook on their own companies. The index has now declined in three of the past four months. Economists suggest that employers may be caught between the expectation of an expanding U.S. economy and concern about anemic growth and instability overseas. It’s a paradox that has resulted in the stock and bond markets, which usually move in opposite directions, rising in tandem this year. “We see a familiar pattern in what is now the fourth-longest economic expansion since World War II — employers remain optimistic about the state of the economy, but it is an optimism marked by fits and starts and reactions to all sorts of political and economic events,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. 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. It has remained above 50 since October 2013. Most of the sub-indices based on selected questions or categories of employer declined during July. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped 1.3 points during July and 0.3 points over the year to 57.2. The U.S. Index of national business conditions, in contrast, bucked the downward trend of the past year (in which it dropped 3.0 points) by gaining 1.5 points. Even so, employers have been more optimistic about the Massachusetts economy than about the national economy for 75 consecutive months. The Current Index, which assesses overall business conditions at the time of the survey, fell 0.2 points to 55.3, while the Future Index, measuring expectations for six months out, slid 1.8 points to 54.8. “July marked the first time since September 2015 that employers were more positive about current conditions than those six months from now. It’s something to watch, since confidence drives employer decisions on hiring and investment moving forward,” said Elliot Winer, chief economist for Northeast Economic Analysis Group LLC. “It’s also worth noting that employer confidence in their own companies has declined by 5.8 points, albeit from a high level, during the past 12 months.” Indeed, the three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.8 points to 55.9, while the Sales Index lost 1.4 points to 55.6, and the Employment Index dropped 2.0 points to 52.5. The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% expecting to hire and only 10% downsizing. “A tightening labor market is finally beginning to put upward pressure on wage growth as employers compete for skilled workers,” said Michael Goodman, executive director of the Public Policy Center (PPC) at UMass Dartmouth. “Wages rose 2.6% for the 12 months ended in June, the fastest annual growth rate since 2009. While this is welcome news for the state’s working families, whose wages have been stagnant for an extended period, it represents a challenge for those employers with limited pricing power who can expect it to be increasingly difficult and expensive to obtain the labor they need to support expected growth in coming months.” Confidence levels in July were higher in Greater Boston (56.8) than in the rest of the Commonwealth (52.2). Non-manufacturing companies enjoyed a significantly brighter outlook at 58.0 than manufacturing employers, who posted an overall confidence level of 52.6. AIM President and CEO Richard Lord, a BEA member, said employers should take encouragement from the moderate approach to business issues taken by state lawmakers during the two-year legislative session that ended Sunday night. Beacon Hill balanced a difficult budget with no tax increases, passed economic-development and energy legislation, and developed a consensus pay-equity measure that balances the needs of employers and workers. “The Legislature and the Baker administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said.

Pioneer Valley Home Sales
Down 11.3% in July

SPRINGFIELD — The Realtor Assoc. of Pioneer Valley reported that single-family home sales in July were down by 11.3% in the Pioneer Valley, compared to the same time last year. The median price was up 8.2% to $224,000. In Franklin County, sales were down 26%, and the median price was up 24.7%. Hampden County saw a 7.5% sales decrease, with the median price rising 0.1%. In Hampshire County, sales were down down 15.6%, while the median price rose 8.1%.

Daily News

BOSTON — A resurgent U.S. stock market, better-than-expected job growth, and growing labor-force participation failed to make believers of Massachusetts employers during July as business confidence fell for a second consecutive month.

The Associated Industries of Massachusetts (AIM) Business Confidence Index declined one point to 55.1 last month, leaving it more than four full points lower than in July 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed across the board on employment, the Massachusetts economy, and employers’ outlook on their own companies. The index has now declined in three of the past four months.

Economists suggest that employers may be caught between the expectation of an expanding U.S. economy and concern about anemic growth and instability overseas. It’s a paradox that has resulted in the stock and bond markets, which usually move in opposite directions, rising in tandem this year.

“We see a familiar pattern in what is now the fourth-longest economic expansion since World War II — employers remain optimistic about the state of the economy, but it is an optimism marked by fits and starts and reactions to all sorts of political and economic events,” said Raymond Torto, chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design.

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. It has remained above 50 since October 2013.

Most of the sub-indices based on selected questions or categories of employer declined during July. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped 1.3 points during July and 0.3 points over the year to 57.2. The U.S. Index of national business conditions, in contrast, bucked the downward trend of the past year (in which it dropped 3.0 points) by gaining 1.5 points. Even so, employers have been more optimistic about the Massachusetts economy than about the national economy for 75 consecutive months.
The Current Index, which assesses overall business conditions at the time of the survey, fell 0.2 points to 55.3, while the Future Index, measuring expectations for six months out, slid 1.8 points to 54.8.

“July marked the first time since September 2015 that employers were more positive about current conditions than those six months from now. It’s something to watch, since confidence drives employer decisions on hiring and investment moving forward,” said Elliot Winer, chief economist for Northeast Economic Analysis Group LLC. “It’s also worth noting that employer confidence in their own companies has declined by 5.8 points, albeit from a high level, during the past 12 months.”

Indeed, the three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.8 points to 55.9, while the Sales Index lost 1.4 points to 55.6, and the Employment Index dropped 2.0 points to 52.5.
The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% expecting to hire and only 10% downsizing.

“A tightening labor market is finally beginning to put upward pressure on wage growth as employers compete for skilled workers,” said Michael Goodman, executive director of the Public Policy Center (PPC) at UMass Dartmouth. “Wages rose 2.6% for the 12 months ended in June, the fastest annual growth rate since 2009. While this is welcome news for the state’s working families, whose wages have been stagnant for an extended period, it represents a challenge for those employers with limited pricing power who can expect it to be increasingly difficult and expensive to obtain the labor they need to support expected growth in coming months.”

Confidence levels in July were higher in Greater Boston (56.8) than in the rest of the Commonwealth (52.2). Non-manufacturing companies enjoyed a significantly brighter outlook at 58.0 than manufacturing employers, who posted an overall confidence level of 52.6.

AIM President and CEO Richard Lord, a BEA member, said employers should take encouragement from the moderate approach to business issues taken by state lawmakers during the two-year legislative session that ended Sunday night. Beacon Hill balanced a difficult budget with no tax increases, passed economic-development and energy legislation, and developed a consensus pay-equity measure that balances the needs of employers and workers.

“The Legislature and the Baker administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said. “We give particular credit to House Speaker Robert DeLeo, who forged meaningful compromises on pay equity, non-compete agreements, and other key issues.”

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PVPC Releases Economic-development Strategy

SPRINGFIELD — The Pioneer Valley Planning Commission (PVPC) recently released its 2016 Comprehensive Economic Development Strategy (CEDS) annual update, as part of its larger Plan for Progress, a 10-year blueprint for economic development in the region. The CEDS features a description of regional economic-development conditions and sets forth goals and objectives for the future, as well as a list of projects seeking the U.S. Department of Commerce’s Economic Development Administration (EDA) public-works funding in the next year. The report highlights the region’s continued decrease in unemployment, an improved workforce-talent pipeline, and increased early-education enrollment and high-school and community-college graduation rates, among others, as metrics illustrating the overall progress being made. The CEDS also lists many major committed projects of regional significance, such as the Center for Hospitality and Culinary Excellence at Holyoke Community College, the Springfield Innovation Center, the CRRC MA subway-car manufacturing plant, and the Aviation Research and Training Center, a collaboration between UMass Amherst and Westover Air Reserve Base. A full digital copy of the 2016 CEDS is available on the PVPC website, www.pvpc.org. Hard copies are also available upon request. The PVPC, which administers this process, has been the EDA-designated regional planning agency for the Pioneer Valley region since 1999, which includes 43 cities and towns in Hampshire and Hampden counties.

Home Sales Rise in Pioneer Valley

SPRINGFIELD — The REALTOR Association of Pioneer Valley reported that single-family home sales in May were up 19.4% compared to the same time last year. The median price was up 2.0% to $205,000. County reports vary. In Franklin County, sales were up 90.3% and prices up 5.6%; in Hampden County, sales were up 16.8% and prices up 1.5%; in Hampshire County, sales were up 10.6% and prices down 3.7%.

Passenger Rail Platform Delayed at Union Station

SPRINGFIELD — Springfield Redevelopment Authority (SRA) Director Christopher Moskal announced recently that required design modifications will delay the opening of a new boarding platform at Springfield Union Station. He said progress at the Union Station Regional Intermodal Transportation Center project continues to advance, and he “expects that the Union Station terminal project itself will open on schedule in January 2017, albeit without the new boarding platform in operation.” He said this “includes the terminal building, the bus terminal, the parking garage, and the passenger tunnel up to the current Amtrak lobby on Lyman Street.” As a separate component of the overall project, MassDOT is committed to delivering a new boarding platform for Amtrak trains. This high-level platform, which will provide ‘level-entry boarding’ for Amtrak passengers, was scheduled to be in operation when Union Station opened. However, in reviewing the new platform’s design, Amtrak indicated that a waiver of two Federal Railroad Administration (FRA) design requirements would be needed. This waiver relating to the width of the new platform was necessitated by the unique configuration of the existing Union Station tracks. The SRA submitted the waiver request on March 10. After discussions between FRA and MassDOT, FRA issued a letter on May 23 requiring full compliance with its design regulations. This FRA decision requires major modifications to the initial design of both the platform and the underground passenger tunnel. Accordingly, the project’s architect has been directed to prepare necessary changes to the project’s plans and specifications. The project team is currently working to finalize a revised schedule and budget. Moskal indicated that MassDOT remains committed to funding related design and construction costs. In the interim, he indicated that Amtrak passengers will access trains from the new terminal by passing through the renovated portion of the tunnel into the current Amtrak lobby and using the existing boarding platform on the Lyman Street side as they do today. After the new boarding platform is completed, the Lyman Street end of the tunnel — the current Amtrak lobby — will be renovated and will reopen. This will result in a fully renovated passenger tunnel between the terminal and Lyman Street.

Ashe Explores Starting Foundation

Hampden County Sheriff Michael J. Ashe Jr., honored by BusinessWest as one of its Difference Makers for 2016, issued a statement to the press recently announcing that he is exploring the possibility of staring a foundation to continue his life’s work. “Like most anyone else facing retirement, I find myself contemplating what I want to do with the rest of my life,” he said. “I know that, despite being in my mid-70s, I still have great intensity and energy. The fire still burns in me for my life’s work of 42 years — assuring that offenders have the best possible likelihood of re-entering the community as law-abiding, productive, positive citizens, giving to, rather than taking from, the lives of others. That life’s work would be hard for me to completely walk away from when I still feel vital and useful and passionate about its value to others. One of the scenarios that I’ve contemplated is to continue that life’s calling in a new framework, to create a local foundation, with myself as its unpaid chief administrator, to enhance our community’s effort to successfully re-enter offenders.” Ashe said he’s far from having an exact blueprint regarding specific ways that such a nonprofit might help, and he’s not yet completely certain that starting and heading up such a philanthropic foundation is where he can be of best service in retirement. But he did say it’s an idea worth exploring. “Although I am not far enough along to have detailed the specifics of the structures of such a possible foundation, I would want any such foundation to be marked by simplicity and integrity,” he explained. “One model that I would use is the local charity Griffin’s Friends, which was founded to bring moments of joy to courageous kids at Baystate Medical Center, and which minimizes administrative costs and maximizes direct service to those it seeks to help.” Ashe said one reason he’s thinking aloud and publicly about this is to put the word out to others who might be likewise interested in founding such a new nonprofit, to let him know of their interest in helping to build what could be “an inspired addition to the edifice that we’ve labored so tirelessly to build during these last 42 years — a community corrections system driven by a vision of social justice, integrity, and public safety.”

Employer Confidence Weakens in June

BOSTON — A month of economic uncertainty punctuated by weak U.S. job growth and the United Kingdom’s impending exit from the European Union drove Massachusetts employer confidence lower during June. The Associated Industries of Massachusetts (AIM) Business Confidence Index fell 1.6 points to 56.1 as employers took an increasingly bearish view of the U.S. economy. At the same time, the confidence reading remained comfortably above the 50 mark that denotes an overall positive economic outlook. Taken quarterly, confidence rose from 55.8 during the first three months of the year to 56.7 during April, May, and June. The June survey of employers overlapped by a few days the landmark vote in Great Britain to leave the European Union, an outcome that caused financial gyrations and concern about U.S. exports in the face of a rising dollar. The confidence readings also came in the wake of the slowest pace of job creation in the U.S. since 2010. “Massachusetts employers are trying to balance a range of economic and political distractions that pull them in different directions month to month,” said Raymond Torto, Chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “The good news is that employers remain highly confident in the Massachusetts economy and in the prospects for their own companies.” Added AIM President and CEO Richard Lord, a BEA member, “the sustained optimism that Massachusetts employers have shown toward the state economy reflects the ability of the Legislature and several administrations to maintain disciplined fiscal policy while creating an environment that allows employers to grow. We look forward to working with policymakers to continue that record as the two-year legislative session ends next month.” 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.

Daily News

BOSTON — A month of economic uncertainty punctuated by weak U.S. job growth and the United Kingdom’s impending exit from the European Union drove Massachusetts employer confidence lower during June.

The Associated Industries of Massachusetts (AIM) Business Confidence Index fell 1.6 points to 56.1 as employers took an increasingly bearish view of the U.S. economy. At the same time, the confidence reading remained comfortably above the 50 mark that denotes an overall positive economic outlook. Taken quarterly, confidence rose from 55.8 during the first three months of the year to 56.7 during April, May, and June.

The June survey of employers overlapped by a few days the landmark vote in Great Britain to leave the European Union, an outcome that caused financial gyrations and concern about U.S. exports in the face of a rising dollar. The confidence readings also came in the wake of the slowest pace of job creation in the U.S. since 2010.

“Massachusetts employers are trying to balance a range of economic and political distractions that pull them in different directions month to month,” said Raymond Torto, Chair of AIM’s Board of Economic Advisors (BEA) and lecturer at Harvard Graduate School of Design. “The good news is that employers remain highly confident in the Massachusetts economy and in the prospects for their own companies.”

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.

All the sub-indices based on selected questions or categories of employer declined slightly during June after rising to a 10-month high in May. The Massachusetts Index, assessing business conditions within the Commonwealth, dropped a modest 0.8 points to 58.5, up 1.6 points from the year earlier. The U.S. Index of national business conditions plunged three points to 48.8. Employers have been more optimistic about the Massachusetts economy than about the national economy for 74 consecutive months. Meanwhile, the Current Index, which assesses overall business conditions at the time of the survey, lost 1.9 points to 55.5, while the Future Index, measuring expectations for six months out, declined 1.5 points to 56.6.

The three sub-indices bearing on survey respondents’ own operations all weakened. The Company Index, reflecting overall business conditions, fell 1.5 points to 57.7, while the Sales Index dropped 2.8 points to 57.0 and the Employment Index lost 0.6 points to 54.5.

“Uncertainty of the sort created by the Brexit vote certainly impedes investment decisions, and with few signs of any pickup in the global economy, we’re probably going to see a slower rebound in capital spending,” said Sara Johnson, senior research director of global economics with IHS Global Insight.

The AIM survey found that nearly 39% of respondents reported adding staff during the past six months, while 19% reduced employment. Expectations for the next six months were stable, with 37% hiring and only 10% downsizing.

AIM President and CEO Richard Lord, a BEA member, said the Brexit vote underscores the profound effect that political discourse has on the global economic outlook. It’s a pertinent lesson for Massachusetts as the Baker administration and Beacon Hill lawmakers wrestle with both a billion-dollar budget deficit and critical debates on energy, wage equity, and the use of non-compete agreements.

“The sustained optimism that Massachusetts employers have shown toward the state economy reflects the ability of the Legislature and several administrations to maintain disciplined fiscal policy while creating an environment that allows employers to grow,” Lord said. “We look forward to working with policymakers to continue that record as the two-year legislative session ends next month.”

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New AHL Franchise Named Springfield Thunderbirds

SPRINGFIELD — Springfield’s new American Hockey League (AHL) franchise will take the ice for the upcoming 2016-17 season as the Springfield Thunderbirds. With hockey fans and local dignitaries looking on from center-ice seats at the MassMutual Center Arena, team officials announced the new name through a pulsating two-minute video on the arena’s state-of-the-art LED scoreboard. “The Springfield Thunderbirds’ name represents the strength and pride of Western Massachusetts. It is a nod to our hockey past, a tribute to the men and woman of the Air Force who are so vital to this region, and a symbol of the new energy and spirit that is palpable in Springfield,” said Nathan Costa, Thunderbirds executive vice president. Thunderbirds is an allusion to two previous Springfield AHL hockey team names, the Indians and the Falcons. The name refers to the animal of Native American legend that creates thunder and lightning by flapping its massive wings. Like the Falcon, it is also a fierce bird of prey. The name also refers to the famous demonstration planes of the U.S. Air Force and serves as an homage to Barnes Air National Guard Base and Westover Air Reserve Base, in Westfield and Chicopee, respectively. The announcement follows a name-the-team campaign that solicited suggestions from the public in a survey coordinated in partnership with MassLive and the Republican. The survey received more than 2,600 responses. “We would like to thank the thousands of fans who participated in this survey,” Costa said. “We were overwhelmed by the creativity and enthusiasm of those who submitted suggestions. Our fans wanted a name that honored the proud history of AHL hockey in Springfield while at the same time reflecting the new energy and excitement of this franchise. We believe the Thunderbirds captures this spirit.” The logo features a bird’s head in bright blue with a curved beak against a background of red and yellow. The team’s name is picked out in yellow and white. “The City of Springfield has a long and storied relationship with the American Hockey League going back to the days of Eddie Shore,” said U.S. Rep. Richard Neal. “For 80 years, professional hockey has been played in our community, and many fans could not imagine a season without a local franchise playing home games at the MassMutual Center. Next season, the Springfield Thunderbirds will take the ice in pursuit of their first Calder Cup. And we have the ownership group to thank for the efforts to keep a charter member of the AHL in downtown Springfield. I am certain that local fans will welcome this exciting new team to ‘the Nest,’ and that the 2016-17 season will be a successful partnership between the Thunderbirds and the Florida Panthers of the NHL.” In coordination with the announcement, the franchise also launched its new website, www.springfieldthunderbirds.com, where fans can now place deposits for season-ticket memberships. The team’s social-media handles are Springfield Thunderbirds on Facebook, @thunderbirdsahl on Twitter, and thunderbirdsahl on Instagram. “Again, so thankful, but not surprised that these outstanding corporate citizens continue to step up for our city of Springfield,” Mayor Domenic Sarno said. “Their continued belief and investment in our Springfield is deeply appreciated. Now we need to pack the house to help assure that professional hockey is here to stay for many years to come. Drop the puck!” Added Florida Panthers Executive Chairman Peter Luukko, “we are excited to have our AHL players take the ice next season with the Springfield Thunderbirds name and logo on their jerseys. This is the start of a new era for AHL hockey in Western Massachusetts, and we look forward to being a part of it.” Founded in 1936 and now with franchises in 30 cities across North America, the American Hockey League serves as the top development league for the players, coaches, managers, executives, and broadcasters of all 30 National Hockey League teams. More than 88% of today’s NHL players are AHL graduates, and for the 15th year in a row, more than 6 million fans attended AHL games in 2015-16. For more information on the Thunderbirds, go HERE.

Employer Confidence Surges in May

BOSTON — Confidence among Massachusetts employers rose to a 10-month high during May as the state approached full employment and the national economy continued to throw off mixed signals. The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.5 points during May to 57.7, the highest level since July 2015. The reading was slightly higher than the 57.3 level posted a year ago and comfortably above the 50 mark that denotes an overall positive economic outlook. The brightening outlook came amid growing evidence that the U.S. economy is regaining its footing after posting a 0.8% growth rate during the first quarter. Recent reports on retail sales, housing starts, and industrial production paint an upbeat picture of the economy in the second quarter. At the same time, the government reported that the U.S. economy created just 38,000 jobs during May, the slowest pace since 2010. “Massachusetts employers appear to have shaken off the uncertainty of the fall and winter and are now feeling optimistic about the remainder of 2016,” said Raymond Torto, chair of AIM’s board of economic advisors and lecturer at Harvard Graduate School of Design. “The most encouraging news is that every constituent measure contained in the Business Confidence Index rose during May, and most were higher than they were a year ago.” 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.

UMass Generates $6.2B in Economic Impact

BOSTON — The University of Massachusetts was responsible for $6.2 billion in economic activity in Massachusetts last year — a record high — and helped to support more than 43,000 jobs statewide, President Marty Meehan announced Tuesday. “UMass educates more students than any college or university in the Commonwealth and is one of the state’s three largest research universities, but it also has a profound impact on the Massachusetts economy based on the scope and reach of its operations,” Meehan said. “UMass is a vital economic engine for the Commonwealth, and its impact is felt in every community and by virtually every family across Massachusetts.” Victor Woolridge, chairman of the UMass board of trustees, said the report illustrates that “UMass truly is here for a reason, and that reason is to serve the entire Commonwealth. The importance of generating an economic impact on the scale that we do — and having it distributed in every corner of the state — cannot be overstated.” The economic impact generated by the five-campus UMass system translates to a 10-to-1 return on investment for state government when total state funding for the university is considered, according to a FY 2015 analysis performed by the UMass Donahue Institute, which conducts economic and public-policy research. The major drivers of economic impact are student, faculty, and staff spending; construction projects; and the university’s purchasing the goods and services required for its activities. The study measured that spending and its ripple effect in determining the $6.2 billion impact estimate. According to the Donahue Institute report, each of the five university campuses generated a substantial economic impact for its region and the state. By campus or unit, the figures were: Amherst, $2.069 billion; Boston, $1.085 billion; Dartmouth, $466.1 million; Lowell, $921.9 million; Medical School, $1.584 billion; and Central Administration, $198.4 million.

Board of Higher Education Amends Leave Policies

BOSTON — A committee of the state Board of Higher Education voted Tuesday to amend the leave policies for non-unit professionals (NUPs) at the state’s 15 community colleges and nine state universities in an effort to better align such policies with those governing UMass employees, public higher-education systems in other New England states, and Massachusetts state employees. The vote is subject to a final vote by the full Board of Higher Education on June 14. If approved, the changes would impact approximately 1650 employees. The board’s Fiscal Affairs and Administrative Policy (FAAP) Committee voted to eliminate the current policy allowing employees to convert unused vacation days into sick time. Going forward under the new policy, any vacation days that remain over a 64-day balance would be forfeited by the employee if not used. The 64-day vacation balance would be reduced over the next two and a half years to a maximum of 50 days that can be ‘carried’ by an employee. Additionally, the committee voted to reduce the number of vacation days allotted to higher-education employees to a maximum of 25, a reduction from a previous allocation of 30 days per year for the longest-serving employees; and to standardize the number of personal days allotted to employees across all three segments of the higher-education system. All non-unit professionals employed at the state’s community colleges and state universities will receive a total of five annual personal days, effective Jan. 1, 2017. “These changes will bring our employment policies for non-unit professionals at community colleges and state universities into alignment with those in place at the University of Massachusetts, at public colleges and universities across New England, and for state employees,” said Higher Education Commissioner Carlos Santiago, who ordered an expedited review of the policies in March. “They will allow us to remain competitive with other institutions in our bid to attract top talent, while also making good on our commitment to be effective stewards of state resources.”

State Unemployment Rate Remains at 4.2% in May

BOSTON — The state’s total unemployment rate remained at 4.2% in May, the Executive Office of Labor and Workforce Development announced Thursday. The preliminary May job estimates from the Bureau of Labor Statistics (BLS) indicate that Massachusetts lost 6,400 jobs. Job losses were impacted by a temporary labor dispute in the information sector. In May, leisure and hospitality was the only sector to experience over-the-month job gains. BLS also revised upward the state’s over-the-month job gains in April, reporting that 15,200 jobs were added compared to the 13,900-job gain originally reported. From December 2015 to May 2016, Massachusetts has added 30,500 jobs. At 4.2%, the unemployment rate is down 0.7% over the year, with the state’s seasonally adjusted unemployment rate dropping from 4.9% in May 2015. There were 26,600 fewer unemployed persons and 49,000 more employed persons over the year compared to May 2015. The Commonwealth’s May unemployment rate remains lower than the national rate of 4.7% reported by the Bureau of Labor Statistics. “The labor force continues to grow, with 7,000 more employed residents and 2,000 fewer unemployed residents in May,” Labor and Workforce Development Secretary Ronald Walker II said, adding that the education and healthcare sector and the professional, scientific, and business-services sector continue to generate the most jobs in Massachusetts. The state’s labor-force participation rate — the total number of residents 16 or older who worked or were unemployed and actively sought work in the last four weeks — remained at 65.0%. The labor-force participation rate over the year has decreased 0.2% compared to May 2015. Over the year, the largest private-sector percentage job gains by sector were in construction; professional, scientific, and business services; other services; and leisure and hospitality.

Online Resource Aims to Keep River Users Healthy

GREENFIELD — In time for the summer recreation season, the Connecticut River Watershed Council (CRWC) and 16 partners have launched the 2016 Connecticut River water-sampling program. Water samples are tested for E. coli bacteria as an indicator for all types of other pathogens that could potentially make one sick. River users can visit the “Is It Clean” web page at www.connecticutriver.us to find bacteria test results at more than 147 river-access and recreation sites in Massachusetts, Northern Conn., Vermont, and New Hampshire. Samples are typically collected at each site weekly or bi-weekly, and test results are posted online 24 hours later, through early October. “When weather gets warm, people head to our rivers to cool off and have fun, and they want to know if our rivers are clean. The data tells us that it is a good idea to stay out of the water for 24 to 48 hours after a heavy rain because bacteria levels could be high,” said CRWC Lower River Steward Alicea Charamut. “Heavy rain is often the cause of high bacteria levels. Bacteria can spike after a storm due to combined sewer overflows and polluted stormwater runoff from urban, suburban, and agricultural areas.” Added CRWC Massachusetts River Steward Andrea Donlon, “cities and towns along the river are making significant investments to reduce pollution to our rivers, and this has made a tremendous difference. We want people to be able to explore and enjoy this wonderful resource. Our rivers are certainly much cleaner than they used to be, but it makes sense for river users to pay attention to this information so they know when it’s clean for swimming or boating.” Water sample results are color-coded and map-based to offer guidance about whether the water is clean enough for swimming and boating. Results are a snapshot of river conditions at the moment the sample was taken, but give river users information they can use to make informed decisions and prevent potential illness. The website provides bacteria data for the Connecticut River and more than 20 tributaries, including the Chicopee River, Mill River in Northampton, Mill River/Lake Warner in Hadley, Farmington River in Connecticut, Ottauquechee and Black Rivers in Vermont, and many more.

Daily News

BOSTON — Confidence among Massachusetts employers rose to a 10-month high during May as the state approached full employment and the national economy continued to throw off mixed signals.

The Associated Industries of Massachusetts (AIM) Business Confidence Index rose 1.5 points during May to 57.7, the highest level since July 2015. The reading was slightly higher than the 57.3 level posted a year ago and comfortably above the 50 mark that denotes an overall positive economic outlook.

The brightening outlook came amid growing evidence that the U.S. economy is regaining its footing after posting a 0.8% growth rate during the first quarter. Recent reports on retail sales, housing starts, and industrial production paint an upbeat picture of the economy in the second quarter.

At the same time, the government reported that the U.S. economy created just 38,000 jobs during May, the slowest pace since 2010.

“Massachusetts employers appear to have shaken off the uncertainty of the fall and winter and are now feeling optimistic about the remainder of 2016,” said Raymond Torto, chair of AIM’s board of economic advisors and lecturer at Harvard Graduate School of Design. “The most encouraging news is that every constituent measure contained in the Business Confidence Index rose during May, and most were higher than they were a year ago.”

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.

Briefcase Departments

AHL Hockey Could Return to Springfield

SPRINGFIELD — Less than a month after losing the Falcons to Tucson, Ariz., hockey could be returning to Springfield for the 2016-17 season. According to Portland, Maine-based WCSH, the Portland Pirates, the American Hockey League affiliate of the Florida Panthers, has been sold to a new ownership group that intends to relocate the team in Springfield. According to a statement released yesterday by the team, “the Portland Pirates have announced that a letter of intent has been signed with an outsider buyer to purchase and relocate the AHL franchise to a new city. The details of the agreement were not disclosed, and final sale is pending approval of the AHL board of governors and the Florida Panthers. All previously purchased season tickets for the 2016-17 season will be refunded.” Portland Mayor Ethan Strimling told WCSH that losing the team “will have a terrible impact on the local economy.” The Springfield Falcons were purchased by their National Hockey League affiliate, the Arizona Coyotes, in April. The club intends to move the Falcons to Tucson in time for the 2016-17 season, and will refund all advance tickets sold to Springfield fans for that season. Portland has been the host city to a minor-league hockey team for almost 40 years, dating back to the Maine Mariners, WCSH said. The Mariners left in 1992, and after a one-year gap, the Pirates arrived in 1993.

State’s Economic Growth Improves in First Quarter

HADLEY — Massachusetts real gross domestic product grew at an annual rate of 2.3% in the first quarter of 2016, according to the Current Economic Index released this week by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. In contrast, according to the U.S. Department of Commerce, national real gross domestic product grew at an annual rate of 0.5% during the same period. Recently revised data now reveal that, in 2015, the state’s economy expanded at an annual rate of 1.4% in the fourth quarter (1.4% for the U.S.), 2.0% in the third quarter (2.0%), 4.9% in the second quarter (3.9%), and 2.0% in the first quarter (0.6%). The pace of economic growth in Massachusetts picked up in the first three months of 2016 after slowing in the second half of 2015. Although underlying indicators were mixed, both employment and earnings recorded strong growth, and the unemployment rate fell. Payroll employment grew at a 2.0% annual rate in the first quarter, up from 0.7% in the prior quarter. Wage and salary income, as estimated from state withholding tax revenue, expanded 5.6% in the first quarter, after falling 7.0% in the final three months of last year. The state’s headline unemployment rate — the so-called U-3 measure — stood at 4.4% in March, down from 4.9% in December, and down from 5.1% in March 2015. The U.S. unemployment rate in March was 5.0%, the same as in December, and down from 5.5% in March of last year. The unemployment rate in Massachusetts is now lower than its pre-recession low of 4.6% in 2007. But this overall strong performance continues to mask troubling imbalances in the labor market. The broader U-6 measure of unemployment, which includes those who are working part-time but want full-time work, as well as those who are marginally attached to the labor force, is still significantly above pre-recession levels. It inched down to 9.3% in March from 9.5% in December and 9.8% in March 2015. The U.S. rate in March was 9.8%, down from 9.9% in December and 10.9% in March 2015. Prior to the recession in 2007, the U-6 reached lows of 7.1% in Massachusetts and 8.0% in the U.S. “Spending on items subject to the state regular sales tax declined by 6.3% in the first quarter, in stark contrast to the very strong growth of 9.5% experienced in the fourth quarter of 2015. Year over year, spending is up 3.5%,” noted Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University. “Most of the drop this quarter was due to spending on automobiles, which slowed after expanding strongly at the end of 2015, and also to weak spending on other taxable sales items in February.” The Mass. Department of Revenue recorded weaker bonus payouts in February, tied to stock-market performance and corporate profits. Market fear tends to dampen business confidence and investment, and a prolonged market downturn may restrain consumer spending as well. The MassBenchmarks Leading Economic Index suggests the state economy will continue to grow at a moderate pace over the next six months, at a 3.1% rate in the second quarter, and a 2.5% rate in the third quarter of this year. The factors weighing on the state and national economic outlook have changed little from last quarter. One factor is the tightening labor market. As there are fewer unemployed workers and as more Baby Boomers retire, it is becoming more difficult for employers to find the workers they need. This is reflected in historically low levels of initial unemployment claims, a sign that employers are reacting to the tightening labor market by holding on to the workers they have. Another factor is slower worldwide economic growth as China’s rapid pace of economic growth has decelerated, Japan’s economy is stalled, and Europe remains sluggish. A third is turmoil in financial markets. Although volatility in stock markets in reaction to falling commodity prices has calmed, there are remaining downside risk factors related to the fallout of weak global demand on corporate profits.

Sergeant Shower Wins Pitch Competition

HOLYOKE — Jonathan LaFrance, an MBA student from Bay Path University, took first place at last night’s awards ceremony and banquet for the Harold Grinspoon Charitable Foundation’s Entrepreneurship Initiative, pitching Sergeant Shower, a biodegradable, two-sided, single-use, all-in-one shampoo and body-wash cloth mitt. LaFrance convinced a panel of judges from six area banks that his pitch was the best at the event held at the Log Cabin. Jonathan Mendez, a Holyoke Community College student, took second place based on his business concept pitch for Mean Green Detergent Machine, a kiosk in stores allowing people to refill their laundry-detergent bottle. Steven Goldberg, a student at Amherst College, took third place with DineToday, a platform allowing restaurants to post discounts for off-peak reservation times. The live event featured a student representative from each of the 14 participating local colleges: American International College, Amherst College, Bay Path University, Elms College, Greenfield Community College, Hampshire College, Holyoke Community College, Mount Holyoke College, Smith College, Springfield College, Springfield Technical Community College, UMass Amherst, Western New England University, and Westfield State University. First-, second-, and third-place winners received $1000, $750, and $500 respectively. Each student participating received $100. The judges represented Berkshire Bank, Country Bank, First Niagara Bank, PeoplesBank, United Bank, and Westfield Bank. The judges also identified nine winning teams as Best Exhibitors. These were selected from a pool of 56 unique companies during a ‘trade show’ portion of the evening which featured the 2016 Grinspoon Entrepreneurial Spirit Award winners. The three first-place winners (each receiving an additional award of $600) were: Connor Brown and Xavier Reed from Amherst College with Meetum, a platform for students to openly share events and activities with the college community; Misael Ramos from Springfield College with Royaume Expressions, garment decoration; and Joey Baurys and Nicolette LaPierre from Western New England University with Hemoflux, a prenatal genetic testing company. The Entrepreneurship Initiative is one of several local initiatives supported by the philanthropy of Harold Grinspoon. For more information, visit www.hgf.org.

Daily News

HADLEY — Massachusetts real gross domestic product grew at an annual rate of 2.3% in the first quarter of 2016, according to the Current Economic Index released this week by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

In contrast, according to the U.S. Department of Commerce, national real gross domestic product grew at an annual rate of 0.5% during the same period.

Recently revised data now reveal that, in 2015, the state’s economy expanded at an annual rate of 1.4% in the fourth quarter (1.4% for the U.S.), 2.0% in the third quarter (2.0%), 4.9% in the second quarter (3.9%), and 2.0% in the first quarter (0.6%).

The pace of economic growth in Massachusetts picked up in the first three months of 2016 after slowing in the second half of 2015. Although underlying indicators were mixed, both employment and earnings recorded strong growth, and the unemployment rate fell. Payroll employment grew at a 2.0% annual rate in the first quarter, up from 0.7% in the prior quarter. Wage and salary income, as estimated from state withholding tax revenue, expanded 5.6% in the first quarter, after falling 7.0% in the final three months of last year.

The state’s headline unemployment rate — the so-called U-3 measure — stood at 4.4% in March, down from 4.9% in December, and down from 5.1% in March 2015. The U.S. unemployment rate in March was 5.0%, the same as in December, and down from 5.5% in March of last year. The unemployment rate in Massachusetts is now lower than its pre-recession low of 4.6% in 2007.

But this overall strong performance continues to mask troubling imbalances in the labor market. The broader U-6 measure of unemployment, which includes those who are working part-time but want full-time work, as well as those who are marginally attached to the labor force, is still significantly above pre-recession levels. It inched down to 9.3% in March from 9.5% in December and 9.8% in March 2015. The U.S. rate in March was 9.8%, down from 9.9% in December and 10.9% in March 2015. Prior to the recession in 2007, the U-6 reached lows of 7.1% in Massachusetts and 8.0% in the U.S.

“Spending on items subject to the state regular sales tax declined by 6.3% in the first quarter, in stark contrast to the very strong growth of 9.5% experienced in the fourth quarter of 2015. Year over year, spending is up 3.5%,” noted Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of Economics and Public Policy at Northeastern University. “Most of the drop this quarter was due to spending on automobiles, which slowed after expanding strongly at the end of 2015, and also to weak spending on other taxable sales items in February.”

The Mass. Department of Revenue recorded weaker bonus payouts in February, tied to stock-market performance and corporate profits. Market fear tends to dampen business confidence and investment, and a prolonged market downturn may restrain consumer spending as well.

The MassBenchmarks Leading Economic Index suggests the state economy will continue to grow at a moderate pace over the next six months, at a 3.1% rate in the second quarter, and a 2.5% rate in the third quarter of this year. The factors weighing on the state and national economic outlook have changed little from last quarter.

One factor is the tightening labor market. As there are fewer unemployed workers and as more Baby Boomers retire, it is becoming more difficult for employers to find the workers they need. This is reflected in historically low levels of initial unemployment claims, a sign that employers are reacting to the tightening labor market by holding on to the workers they have.

Another factor is slower worldwide economic growth as China’s rapid pace of economic growth has decelerated, Japan’s economy is stalled, and Europe remains sluggish. A third is turmoil in financial markets. Although volatility in stock markets in reaction to falling commodity prices has calmed, there are remaining downside risk factors related to the fallout of weak global demand on corporate profits.