A two-month slide in business confidence came to an end in February, but Bay State employers are largely in wait-and-see mode as they try to discern what track the economy will take in 2023, according to the latest readout from Associated Industries of Massachusetts.
AIM’s Business Confidence Index gained 0.3 points last month to rise to 53.5 on the zero-to-100 scale. February’s confidence level sat 3.2 points lower than a year prior. Since tumbling nearly 5 full points in December, there has not been significant movement in the index.
AIM said that sentiments among the businesses that responded to its survey are “driven by a swirl of often contradictory economic signals” and that companies are still trying to figure out whether a recession, persistently high inflation, labor shortages or economic growth will be the trend for 2023. “Leading indicators suggest that economic growth will decelerate during 2023, yet the state and national economies continue to exhibit a strong labor market, low unemployment, and a persistently high rate of inflation,” the organization said.
Employers felt better in February about the Massachusetts economy than about the national economy. The Massachusetts Index gained 3.2 points last month to climb to 53.4, but it remains 4.3 points below last February’s mark. At the same time, the US Index remained in pessimistic territory for a fifth straight month with a reading of 47.1 despite gaining 0.4 points in February.
AIM also flagged a shift in its Manufacturing Index: while confidence among non-manufacturing companies rose to 56.1 in February, the outlook for manufacturing slumped 1.3 points and landed in the pessimistic range at 49.5.
“Consumer spending remains strong nationally and the job market is still historically tight — Massachusetts payroll employment grew at an annual rate of 4.2 percent in the fourth quarter,” Katherine Kiel, professor of economics at the College of the Holy Cross, said. “At the same time, the fact that confidence among Massachusetts manufacturing companies has fallen into pessimistic territory is a matter of concern.”