Confidence Down Significantly Among Manufacturing Companies
FEB. 5, 2024…..Massachusetts businesses kicked off the new year with a sunny disposition.
Business confidence among employers surveyed by Associated Industries of Massachusetts rose in January to an 11-month high. The business trade group attributed the boost to national economic growth, inflation that has cooled off from past levels and the chance that the Federal Reserve will reduce interest rates.
AIM’s business confidence index, which is measured on a 100-point scale where a score of 50 denotes the line between pessimism and optimism, increased 0.9 points last month to 53.5. That’s a touch above the rating one year earlier and matches the high recorded in February 2023.
“The US economy grew at a surprisingly robust pace in the second half of 2023, outpacing the economies of Europe and other developed countries,” said Sara Johnson, chair of AIM’s Board of Economic Advisors. “Businesses expect more subdued US growth in 2024 amid multiple geopolitical risks. Thus, Massachusetts employers are becoming more cautious in their hiring decisions.”
The index, based on a survey of more than 140 employers, has been close to or above the midpoint for the past year, dipping just below the 50 mark in May and June and again in September.
Massachusetts employers surveyed by AIM are increasingly confident about the outlook at both the state and national levels. Compared to January 2023, the Massachusetts-specific index is up 3.8 points to 54, while the U.S. index has increased 3.7 points over the past year and crept into positive territory in January at 50.4.
Many Bay State businesses spent months pushing Beacon Hill to embrace tax relief, and Gov. Maura Healey in the fall signed into law a package whose impact is expected to rise to about $1 billion per year once fully implemented.
AIM President Brooke Thomson also pointed Monday to an executive order Healey signed last month instructing state agencies not to specify a minimum level of education when they seek to hire new employees.
“We celebrate the fact that Massachusetts has the best higher education system on the planet, but we also have to create opportunities for that half of the population who have tremendous skills and the potential to contribute to the economic future of the commonwealth,” Thomson said.
While the overall business confidence index was several points into optimistic territory, AIM said January’s results “highlighted a growing confidence gap between manufacturing companies and non-manufacturers.”
Among manufacturers, the score slid deeper into pessimistic territory, falling 3.4 points in January to 46.4. The score for all other companies rose three points to 57.
