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The Business Confidence Index (BCI), has become one of the most prominent measures of the health of the Massachusetts economy. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative.

The BCI, supervised by a distinguished group of economists and business leaders called AIM Board of Economic Advisors, is widely reported in the news media and measures the willingness of employers to expand, hire and make capital investments.

 

 

Latest BCI Results

September 2022 - Business Confidence Weakens in September

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 1.4 points to 53.9, its lowest level since June. The Index now rests 5 points lower than its level of a year ago.

The decrease reflects the swirl of contradictory elements roiling the economy – surging inflation, rising interest rates and shrinking economic output on the one hand and a persistently strong demand for workers on the other.

The September survey responses came as the Federal Reserve raised interest rates another three-quarter of a point on September 21 and the financial markets closed out their worst month since March 2020.

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August 2022 - Business Confidence Strengthens in August

The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.5 points to 55.3 after posting a two-point gain in July.  The Index remains 6.7 points lower than a year ago but comfortably within optimistic territory.

The increase reflected brighter views among employers about both the state and national economies, as well as a bullish outlook among manufacturers.

Most survey responses came before Federal Reserve Chair Jerome Powell sent financial markets reeling by reaffirming the Fed’s commitment to moderating inflation during a speech in Jackson Hole, Wyoming on August 26.

“The current economy seems to be operating on two levels,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors

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July 2022 - Business Confidence Rebounds in July

Massachusetts employers shrugged off inflation, rising interest rates and a second consecutive quarter of real gross domestic product contraction to post an increase in confidence during July.

The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.0 points to 52.8 after falling close to pessimistic territory in June. The Index remains 12.8 points lower than a year ago.

The increase reflected the paradoxical nature of the current economy, which has seen economic output decrease both statewide and nationally since January despite a strong labor market with low unemployment and a surplus of job openings.

Employers remain bullish about hiring plans and also reported a brighter view of both the Massachusetts and US economies during July.

“The Federal Reserve continues to balance efforts to moderate the highest rate of inflation in 40 years with an economy that is slowing down but still fundamentally strong in many areas,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.

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May 2022 - Business Confidence Tumbles in May

Business Confidence Tumbles in May

Rising interest rates, turbulent financial markets and the possibility of recession brought Massachusetts employer confidence to its lowest level in 18 months during May.

The Associated Industries of Massachusetts Business Confidence Index (BCI) slipped 3.4 points to 54.7. The Index now rests 7.2 points lower than a year ago, though it remains within optimistic territory.

Driving the decline was growing concern about the course of both the state and national economies. The BCI’s US Index plummeted 9.1 points for the month and more than 13 points for the year.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, bucked the statewide trend by increasing 0.6 points to 57.5. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, dropped from 61.8 in April to 56.1 last month.

May confidence numbers come against the backdrop of conflicting signals about the direction of the economy. Coming off a first quarter that saw the Massachusetts economy contract at a 1 percent annualized rate, the state’s unemployment rate nevertheless decreased by two-tenths of a percentage point to 4.1 percent in April and employers continue to struggle to find and attract qualified workers.

Massachusetts companies turned pessimistic about the national economy during May as inflation hit a 40-year high and major stock indices declined further,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.

“Employers are now less confident about future conditions than present ones. At the same time, they remain optimistic about the prospects for their own companies.”

Supply chain issues continue to test Massachusetts employers.

“We are unable to budget on purchases and must buy earlier and in larger volumes and at higher costs just to ensure we have raw materials.  Daily and weekly updates from our suppliers show that they have little control on their pricing and production schedules,” one employer wrote on the confidence survey.

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 in 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators 

The constituent indicators that make up the Index were uniformly lower in May.

The Massachusetts Index assessing business conditions within the Commonwealth shed 3.5 points to 53.8, down 6.9 points since May 2021. The US Index measuring conditions throughout the country fell to its lowest level since December 2020.

The Current Index, which assesses overall business conditions at the time of the survey, declined 1.4 points to 56.7. The Future Index, measuring projections for the economy six months from now, lost 5.3 points to 52.7.

The confidence employers have in their own companies declined 1.4 points to 58.6, ending the month 5.2 points lower than in May 2021.

The Manufacturing Index fell 1.8 points to 54.5, breaking a string of three consecutive monthly gains. The Manufacturing Index now stands 7.2 points less than a year ago.

Medium-sized companies (58.7) were more optimistic than large companies (52.3) or small companies (51.0).

Edward H. Pendergast, Managing Director, Dunn Rush & Co., said Massachusetts companies spent two years dealing with a single, overwhelming challenge – COVID-19 – but now face a confusing intersection of challenges ranging from rising costs for materials to geopolitical instability.

“We still see healthy merger-and-acquisition activity along with new companies growing into the economy, but employers must deal with an unusually large number of distractions as they try to do business,” Pendergast said.

Price Increases

AIM President and CEO John R. Regan, also a BEA member, said two recent reports by the US Census Bureau found that the COVID-19 pandemic drove people out of major northern population centers like Boston and accelerated migration to suburban technology boom towns in the South and West.

The list of the 15 cities across the United States with the largest population losses during the first year of the pandemic includes Revere, Massachusetts, at number three (-4.0 percent) and Boston at number 12 (-2.9 percent).

“The numbers are a sobering reminder that high-costs states like Massachusetts and California cannot wantonly increase taxes and other costs on businesses and individuals and expect them to stay for the great clam chowder. Massachusetts voters who will consider a constitutional amendment this fall that would raise taxes on many home sales and retirement nest eggs should remember that the entrepreneurs driving economic prosperity in Massachusetts may just decide they have other options,” Regan said.

The monthly Business Confidence Index, initiated by AIM’s Board of Economic Advisors in July 1991, is based on a survey of AIM member companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as for respondents’ own operations. On the Index’s 100-point scale, a reading above 50 indicates that the state’s employer community is predominantly optimistic, while a reading below 50 points to a negative assessment of business conditions.   A number of component sub-indices are derived by analyzing responses to selected questions or those of particular groups of respondents. 

Media Contacts:

Sara L. Johnson (Chair), 781-367-0587
Michael A. Tyler, CFA, (Vice Chair) Chief Investment Officer, Eastern Bank Wealth Management 617-897-1122

Alan Clayton-Matthews, Ph.D., Professor Emeritus of Economics & Public Policy, Northeastern University; Senior Contributing Editor, MassBenchmarks (617) 512-6224
Edward H. Pendergast, Managing Director, Dunn Rush & Co., 617-451-0001

Elmore Alexander, Dean Emeritus, Ricciardi College of Business, Bridgewater State University, 267-980-4652

Nada Sanders, Distinguished Professor of Supply Chain Management, Northeastern University, 614-284-3908

Michael D. Goodman, Ph.D., Professor of Public Policy, UMass Dartmouth 617-823-2770

Katherine A. Kiel, Ph.D., Professor of Economics, College of the Holy Cross 508-793-2743

Suzanne Dwyer, President, Massachusetts Capital Resource Company 617-536-8251

Jim Sibley, Regional Commissioner, Bureau of Labor Statistics
Barry Bluestone, Ph.D., Professor of Public Policy and Urban Affairs (retired), Northeastern University 617-899-9300
Raymond G. Torto (Emeritus), Ph.D., CRE, Harvard Graduate School of Design 617-930-6625

John R. Regan, President, Associated Industries of Massachusetts 617-262-1180
Christopher Geehern, Executive Vice President, Public Affairs and Communication, Associated Industries of Massachusetts 617-834-4414, @aimbusinessnews

 

April 2022 - Business Confidence Rises in April

Business Confidence Rises in April

Massachusetts employers grew more confident again in April, despite an economy slowed by inflation and geopolitical uncertainty during the first quarter.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.9 points last month to 58.1. The Index has now risen for three consecutive months and sits comfortably within optimistic territory.

The increase reflected strengthening employer views about both the Massachusetts and US economies, even though real GDP declined at an annual rate of 1.4% nationally and an estimated 1.0% in the state during the first quarter of 2022.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, showed Worcester County employers with a 56.9 confidence reading. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, was 61.8.

The sharp slowdown in growth in the first quarter reflects the impact of the Omicron variant of COVID-19, continued supply chain woes and the eroding effect of inflation on purchasing power. While declines in net exports and inventory accumulation held back US real GDP in the first quarter, real final sales to private domestic purchasers—a good indicator of underlying demand—increased at a robust 3.7% annual rate.

At the same time, tax collections in Massachusetts were $2 billion more than expected during April, pushing the state at least $3.5 billion ahead of its year-to-date benchmark with just two months left in the fiscal year.

“Massachusetts companies remain optimistic about the sustainability of the economic expansion even amid tightening financial conditions and uncertainties related to COVID-19 and the war in Ukraine,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.

“Every element of the Business Confidence Index was in optimistic territory last month, with the highest reading for employers’ views about the prospects of their own companies.”

Supply chain issues continue to test Massachusetts employers.

“USA manufacturing knows this as fact.  We know this when ‘simple/common’ items in our industry are not available from anywhere as a stock item any longer,” wrote one participant in the Business Confidence Survey.

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 in 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators 

The constituent indicators that make up the Index were mostly higher in April.

The Massachusetts Index assessing business conditions within the Commonwealth jumped 1.7 points to 57.3, down 3.1 points since April 2021. The US Index measuring conditions throughout the country moved into optimistic territory at 53.1, up from 49.9 in March.

Employers are equally bullish about future business conditions and present ones. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.5 points to 58.1. The Future Index, measuring projections for the economy six months from now, gained 0.3 points to 58.0.

The confidence employers have in their own companies declined 0.2 points to 60.0, ending the month 1.6 points lower than in April 2021.

The Manufacturing Index increased 0.7 points to 56.3 for its third consecutive monthly gain. The Manufacturing Index now stands 3.2 points less than a year ago.

Small companies (60.0) were more optimistic than medium-sized companies (57.3) or large companies (56.7).

Alan Clayton-Matthews, Professor Emeritus of Economics and Public Policy at Northeastern University, Senior Contributing Editor, MassBenchmarks and a BEA member, said the state and national economies continued to create jobs during the first quarter of the year.

“Massachusetts payroll employment in the first quarter grew at an annual rate of 5.2 percent, slightly faster than the 4.8 percent pace for the U.S,” Clayton-Matthews said.

“Between the first quarter of 2021 and the first quarter of 2022 employment increased by 5.3 percent in Massachusetts and 4.6 percent in the U.S. However, in March 2022, the state remained 2.4 percent below pre-pandemic payroll employment levels, which peaked in February 2020.”

Job Market

AIM President and CEO John R. Regan, also a BEA member, said COVID lockdowns in China and the Russian invasion of Ukraine have generated price increases and material shortages for Massachusetts employers.

“Companies are being forced to use every bit of creativity they can muster to secure the supply of raw materials and get their products into key markets,” Regan said.

“We see business are building inventory, substituting hard-to-obtain materials, extending lead times and finding alternative suppliers to continue serving customers.”

The monthly Business Confidence Index, initiated by AIM’s Board of Economic Advisors in July 1991, is based on a survey of AIM member companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as for respondents’ own operations. On the Index’s 100-point scale, a reading above 50 indicates that the state’s employer community is predominantly optimistic, while a reading below 50 points to a negative assessment of business conditions.   A number of component sub-indices are derived by analyzing responses to selected questions or those of particular groups of respondents. 

Media Contacts:

Sara L. Johnson (Chair), 781-367-0587
Michael A. Tyler, CFA, (Vice Chair) Chief Investment Officer, Eastern Bank Wealth Management 617-897-1122

Alan Clayton-Matthews, Ph.D., Professor Emeritus of Economics & Public Policy, Northeastern University; Senior Contributing Editor, MassBenchmarks (617) 512-6224
Edward H. Pendergast, Managing Director, Dunn Rush & Co., 617-451-0001

Elmore Alexander, Dean Emeritus, Ricciardi College of Business, Bridgewater State University, 267-980-4652

Nada Sanders, Distinguished Professor of Supply Chain Management, Northeastern University, 614-284-3908

Michael D. Goodman, Ph.D., Professor of Public Policy, UMass Dartmouth 617-823-2770

Katherine A. Kiel, Ph.D., Professor of Economics, College of the Holy Cross 508-793-2743

Suzanne Dwyer, President, Massachusetts Capital Resource Company 617-536-8251

Jim Sibley, Regional Commissioner, Bureau of Labor Statistics
Barry Bluestone, Ph.D., Professor of Public Policy and Urban Affairs (retired), Northeastern University 617-899-9300
Raymond G. Torto (Emeritus), Ph.D., CRE, Harvard Graduate School of Design 617-930-6625

John R. Regan, President, Associated Industries of Massachusetts 617-262-1180
Christopher Geehern, Executive Vice President, Public Affairs and Communication, Associated Industries of Massachusetts 617-834-4414, @aimbusinessnews

 

March 2022 - Business Confidence Rises Again in March

Business Confidence Rises Again in March

Massachusetts employers grew more confident for the second consecutive month in March, continuing to create jobs despite wariness about slowing economic growth, persistent supply chain interruptions and rising prices.

The Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.5 points last month to 57.2. The Index remains within optimistic territory but rests 3.7 points lower than its level of a year ago when employers anticipated an early end to the COVID pandemic.

Driving the confidence increase were strengthening employer views about the prospects of their own companies and growing optimism among manufacturers.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, showed Worcester Country employers with a 55.1 confidence reading. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, was 57.0.

The Massachusetts economy grew at an 8.2 percent annualized rate in the fourth quarter of 2021, but economists believe factors ranging from Omicron to the Russian invasion of Ukraine dampened that rate in the first quarter. Analysts expect US economic growth to slow from a 6.9 percent annualized rate in the fourth quarter to 1 percent in the first three months of 2022.

At the same time, Massachusetts companies also face persistent uncertainty from commodity inflation, labor shortages and the Federal Reserve’s move to raise interest rates.

“We see a familiar pull and tug in the confidence reading between solid levels of confidence in the underlying economy and concerns about a multitude of geopolitical, resource, cost, and public-health issues.,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.

 

“Employers remain confident about the prospects of their own companies in 2022 – and that translates into a strengthening of the Employment Index. According to the Bureau of Labor Statistics, Massachusetts employment increased by 24,000 in the first two months of 2022.”

Supply chain issues continue to test Massachusetts companies.

 

“We have difficulty getting various types of pipe for our construction projects as well as equipment parts to repair our heavy equipment.  Most vendors have been increasing their prices, yet we can’t increase our prices on our construction contracts.  We are ordering supplies as soon as we know we need them or sooner,” wrote one participant in the Business Confidence Survey.

 

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 in 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators 

The constituent indicators that make up the Index were mixed during March.

The confidence employers have in their own companies rose 1.6 points to 60.2, slightly less than it was a year ago.

The Massachusetts Index assessing business conditions within the Commonwealth fell 2.1 points to 55.6, down 5 points since March 2021. The US Index measuring conditions throughout the country remained unchanged at 49.9, just short of optimistic territory and 8.8 points less than a year ago.

Employers are slightly more bullish about future business conditions than present ones. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.2 points to 56.6. The Future Index, measuring projections for the economy six months from now, lost 0.2 points to 57.7.

The Manufacturing Index increased 2.2 points to 55.6 for its second consecutive monthly gain. The Manufacturing Index now stands 3.9 points less than a year ago.

Small companies (61.4) were more optimistic than medium-sized companies (58.2) or large companies (52.4).

Michael A. Tyler, Chief Investment Officer at Eastern Bank Wealth Management and Vice Chair of the BEA, said inflation is much like a forest fire in that a controlled burn can be healthy while an inferno can cause damage that lasts for years.

“An inflationary fire requires fuel, oxygen, and spark, just like a forest fire. The fuel is an increasing money supply, which has grown by 40% in the past two years. The oxygen is strong consumer and industrial demand, although those seem to be moderating lately. And the sparks include labor shortages, tight housing inventory, and wage pressures,” Tyler said.

Job Market

AIM President and CEO John R. Regan, also a BEA member, said Massachusetts employers have created 173,500 jobs during the past 12 months and 571,400 jobs since the employment trough of April 2020.

The US Department of Labor announced Friday that U.S. employers added 431,000 jobs in March on a seasonally adjusted basis. The figure was just shy of forecasts, and there was an upward revision of 95,000 for the previous two months of this year.

“The ultimate measure of success for the Massachusetts is the number of jobs employers create for the citizens of the commonwealth,” Regan said.

 

“It’s a remarkable accomplishment that employers have replaced most of the jobs lost during the initial COVID-19 shutdown. That growth underscores the importance of educating and training the next generation of skilled workers to fill the jobs being created.”

 

The monthly Business Confidence Index, initiated by AIM’s Board of Economic Advisors in July 1991, is based on a survey of AIM member companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as for respondents’ own operations. On the Index’s 100-point scale, a reading above 50 indicates that the state’s employer community is predominantly optimistic, while a reading below 50 points to a negative assessment of business conditions.   A number of component sub-indices are derived by analyzing responses to selected questions or those of particular groups of respondents. 

 

February 2022 - Confidence Strengthens, for 1st time in six months

Confidence Strengthens, for 1st time in six months

Confidence among Massachusetts employers strengthened for the first time in six months during February amid a swirl of conflicting signals ranging from the abatement of Omicron to the Russian invasion of Ukraine.

The Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.8 points last month to 56.7. The Index remains within optimistic territory and virtually identical to its level of a year ago.

More than three-quarters of responses came before Russia began military operations in Ukraine.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, showed Worcester Country employers with a 58.1 confidence reading. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, was 54.1.

The increase in employer confidence during February was driven by brightening views of both the state and national economies. The Massachusetts economy grew at an 8.2 percent annualized rate in the fourth quarter of 2021 while the US economy expanded at a 6.9 percent annual clip.

At the same time, Massachusetts companies face uncertainty from factors such as commodity inflation, the Federal Reserve’s anticipated move to raise interest rates and, now, potential fallout from economic sanctions against Russia.

 

“The COVID-19 pandemic has for two years been the dominant external factor in determining the outlook of employers, so it makes sense that confidence rose as Omicron cases declined in late January and  February,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors and Executive Director of Global Economics at S&P Global Market Intelligence.

 

“Despite the many uncertainties, employers remain confident about the prospects of their own companies in 2022.”

 

Labor shortages continue to trouble employers.

 

“Sales have greatly improved.  Inflation and supply chain issues persist.  Labor shortage getting people back to work remains an issue without much progress,” wrote one survey participant.

 

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 in 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators 

The constituent indicators that make up the Index were mostly higher during February.

The confidence employers have in their own companies remained unchanged at 58.6 points, leaving it 0.4 points less than it was a year ago.

The Massachusetts Index assessing business conditions within the Commonwealth surged 2.4 points to 57.7, up 3.2 points since February 2021. The US Index measuring conditions nationally gained 2.2 points in February, leaving it just short of optimistic territory at 49.9.

Employers are more bullish about future business conditions than present ones. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.4 points to 55.4. The Future Index, measuring projections for the economy six months from now, gained 0.2 points to 57.9

The Manufacturing Index dropped 6.7 points to 53.4 after jumping 4.8 points in January. The wide month-to-month swing may be the result of a statistical anomaly. The Manufacturing Index now stands 2.8 points less than a year ago.

Large companies (58.9) were more bullish than small companies (57.8) or medium-sized companies (53.8).

Barry Bluestone, Professor Emeritus of Public Policy and Urban Affairs at Northeastern University and a BEA member, said the persistent labor shortage reflects long-term demographic trends that will require a concerted approach by policymakers, business and educational institutions to align training with the skills needed by growing industries.

 

“There will be thousands of job opportunities during the coming years in areas such as advanced manufacturing, software, robotics and biosciences. The degree to which the economy will grow will be determined by our success in educating workers – particularly those traditionally left behind – with the skills needed for the new economy,” said Bluestone, who is part of a group expanding employment opportunities for students at Madison Park Technical Vocational High School in Boston.

 

Costs of War

AIM President and CEO John R. Regan, also a BEA member, acknowledged the human tragedy of the war in Ukraine while noting that the Russian invasion will exacerbate supply shortages and price increases.

“The primary economic consequence of the crisis will be additional upward pressure on an inflation rate that is already the highest in 40 years. Disruptions to the oil markets, uncertainty about grain supplies (Russia and Ukraine together supply a quarter of the world’s wheat), and inevitable increases in military spending will stress economies already struggling to keep up with demand,” Regan said.

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Over 30 Years in BCI Timeline

1990
  • Massachusetts Tech Boom (beginning 1990)
  • Economic Recession-resulting from S&L Crisis (1991)
  • World imports of goods and services rose from 14% of global GDP in 1991 to a peak of 24% 
2000
  • DOT.Com Bubble Burst (2000)
  • Market Downturn (2002)
  • Global Financial Crisis precipitated by sub-prime mortgage crisis (2007-2009)
2010
  • Massachusetts named most innovative State in the U.S (2014)
  • Massachusetts named the best State in the U.S (2017)
2020
  • COVID-19 Pandemic (2021)

Sara L. Johnson

“The Business Confidence Index at once identifies developing trends that will shape the economy and the manner in which those trends will affect the willingness of companies to invest, hire and grow.”