AIM’s Business Confidence Index (BCI) Lost 4.4 points to End the Month at 46.0
Massachusetts businesses turned pessimistic during March as uncertainty surrounding tariffs and rising costs pushed employer sentiment to its lowest level since July 2020.
The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 4.4 points to end the month at 46.0. A reading less than 50 on the 100-point Index indicates a pessimistic outlook.
The BCI was 6.2 points lower than in March 2024. The Index has lost 9.6 points over the past two months.
“The broadly based weakening of confidence reflects anticipation of disruptive import and export tariffs together with uncertainty about federal tax and spending policies. Meanwhile, the export-oriented Massachusetts economy appears to be downshifting, with payroll employment falling and unemployment rising in the first two months of 2025,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.
Comments from survey participants showed employers grappling with the implications of changes to government policy.
“The uncertainty regarding Trump’s tariffs and the damage by Musk’s job and funding cuts is having a direct impact on our ability to purchase raw materials and deliver cost-effective finished goods to our customers,” wrote one manufacturer.
Not all the news was bad. Another manufacturer wrote: “Business is steady, no major changes predicted.”
The AIM Index, based on a survey of more than 140 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, 1997-98, and its all-time low of 33.3 in February 2009.
Constituent Indicators
The constituent indicators that make up the Index all fell into pessimistic range during March.
The confidence employers maintain in their own operations declined 4.3 points to 49.6. That figure was 4.3 points weaker than in March 2024.
The Massachusetts Index assessing business conditions within the Commonwealth slid 1.8 points to 44.7, leaving it 7.6 points lower than a year earlier. The US Index measuring conditions throughout the country dropped 7.6 points to its lowest level in five years.
The Current Index, which assesses overall business conditions at the time of the survey, lost 3.5 points to 47.9. The Future Index predicting conditions six months from now declined 5.3 points to 44.2.
The Manufacturing Index fell 7.5 points to 45.1. The Employment Index lost 4.3 points to 48.1.
Large companies (53.3) were more optimistic than medium-sized companies (46.6) or small companies (40.2).
Michael A. Tyler, Vice Chair of the Board of Economic Advisors, noted that businesses in Massachusetts are deeply engaged in global trade, so the prospect of high tariffs can be terrifying – especially for companies whose supply chains can’t easily be revamped. Fear of economic reprisals from foreign governments has also affected manufacturers with significant export businesses.
“So, it’s not at all surprising that confidence plunged in the past two months, especially among manufacturers, even before President Trump’s announcement of much more severe tariffs in early April. Lower confidence can itself lead to lower spending and eventually a recession, making this month’s Business Confidence survey results particularly concerning,” Tyler said
Persistent Concern about Tariffs
AIM President and CEO Brooke Thomson said employers remain concerned that new tariffs will cause significant harm to Massachusetts businesses, which export some $77 billion worth of goods each year to 210 markets globally.
“One Massachusetts company told us that a $1 million contract set for March was cancelled with less than 48-hours’ notice. Another manufacturing company estimates that tariffs will increase costs by $2 million – all of which would be passed on to customers,” Thomson said.
Source: AIM
