Business confidence in Massachusetts was essentially flat during September as employers remained pessimistic about an economy that continues to struggle under the weight of the seven-month-old COVID-19 pandemic.

The Associated Industries of Massachusetts Business Confidence Index (BCI) rose three-tenths of a point to 46.6 last month, up from a low of 38.4 in April but still 12.3 points lower than a year ago.

The reading remains below the 50 level that signals optimism.

Opinions about the state of the national economy strengthened while confidence in the Massachusetts economy declined. Employers feel more bullish about the future than about present conditions.

The stable confidence reading came during a month in which the Massachusetts unemployment rate fell from a highest-in-the-nation 16.2 percent to 11.3 percent. It was also a month that saw the number of newly reported COVID-19 cases in the commonwealth begin to accelerate.

“Employer comments suggest a both uncertainty about the presidential election and frustration about the persistent disruption of the COVID pandemic,” said Raymond G. Torto, professor at the Harvard Graduate School of Design and Chair of the AIM Board of Economic Advisors.

“Confidence among employers varies widely, depending upon the degree to which the economic downturn is affecting particular industries.”

One participant in the confidence survey commented: “Conditions are quite uneven – dire for many, marginally satisfactory for some, and extremely strong for a few.”

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 Business Confidence Index were mixed during September.

Employers’ confidence in their own companies fell slightly to 48.7 – 9.5 points lower than in September 2019.

The Massachusetts Index assessing business conditions within the commonwealth lost 2.0 points to 44.1 while the US Index measuring conditions nationally rose 4.2 points to 42.6. The state confidence reading has dropped 4.7 points during the past two months and now sits 19.2 points below its reading of September 2019.

The gap between attitudes toward Massachusetts and the nation shrank from 12 points in July – the largest in a decade – to 1.5 points last month. Massachusetts lost 403,200 jobs between August 2019 and August 2020.

The Current Index, which assesses overall business conditions at the time of the survey, lost a point to 43.9. The Future Index, measuring expectations for six months out, rose 1.5 points to 49.2, just shy of optimistic territory.

The Employment Index increased slightly – 0.7 points to 48.6 – while the Sales Index, a leading indicator, rose 0.2 points to 45.0.

Large companies (49.7) were more optimistic than small companies (47.4) or medium-sized companies (43.9). Non-manufacturers (48.8) were more bullish than manufacturing companies (46.8).

“The confidence index continues to show a clear disparity by industry and by company size in the consequences of the economic downturn,” said Paul Bolger, President, Massachusetts Capital Resource Company.

“At the same time, it is a positive sign that the Future Index is higher than the Current Index. That means employers looking beyond the current uncertainty anticipate improvement six months down the road.”

Preserving the Business Climate

AIM President and CEO John R. Regan, also a BEA member said the continued economic uncertainty facing employers underscores the importance of decisions by the Massachusetts Legislature to maintain a competitive business climate. He cited a recent vote to table two bills that would have presumed that employees who contract COVID-19 did so while on the job and could thus seek workers compensation benefits.

“The decision by the Legislature was good news for employers already facing huge potential increases in unemployment insurance taxes,” Regan said.

“Expanded workers compensation eligibility is inconsistent with the public health science because workers could just as well contract COVID-19 from family, friends or a trip to the beach as from the workplace. The presumption bills would have forced workers compensation insurers to prove a negative.”