Business confidence continued to rebound during June as Massachusetts methodically re-opened its economy and COVID-19 cases surged elsewhere in the country.

The Associated Industries of Massachusetts Business Confidence Index rose 6.9 points to 49.0, just a point shy of the level that denotes an optimistic outlook among employers.

The increase, which came three months after the index suffered the largest one-time decline in its history, reflected the relatively smooth rollout of the state’s four-step re-opening plan and progress in containing the COVID-19 pandemic.

Confidence was closely linked to where a company was on the re-opening schedule. Manufacturing companies, many of which have operated throughout the pandemic as essential businesses or were among the first companies to re-open, were more confident than retail companies and restaurants that had to wait until late June to welcome back customers.

“Companies certainly want to re-open as soon as possible and hire back some of the one million Massachusetts residents who lost their jobs during the pandemic. At the same time, the flare-up of COVID-19 cases in states that opened aggressively seems to underscore the value of moderation,” said Raymond G. Torto, professor at the Harvard Graduate School of Design and Chair of the Board of Economic Advisors.

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 uniformly higher during June.

Employers’ confidence in their own companies rose 5.9 points to 51.6, moving into optimistic territory for the first time since the COVID shutdown.

The Massachusetts Index assessing business conditions within the commonwealth increased 9.4 points to 46.8, leaving it 14.4 points lower than in June 2019. The US Index measuring conditions nationally gained 7.7 points to 43.7, a drop of 14.3 points during the year.

The Current Index, which assesses overall business conditions at the time of the survey, surged 10.2 points to 46.3. The Future Index, measuring expectations for six months out, rose 3.6 points to 51.8.

The Employment Index increased 1.8 points in May while the Sales Index, a leading indicator, gained 11.4 points to 51.7.

Manufacturing companies (49.4) were slightly more confident than non-manufacturers (47.8). Small companies (50.1) were more optimistic than medium-sized companies (49.2) or large companies (46.3). Companies in eastern Massachusetts (49.4) were more optimistic than those in the west (48.5).

Michael D. Goodman, Professor of Public Policy at UMass Dartmouth and a BEA member, said the Massachusetts job picture brightened slightly during the past month as employers began to resume business operations, but that the state economy continues to face significant challenges and uncertainty.

“In addition to its massive disruption to our daily social and economic life, the pandemic presents a significant threat to what are typically two of the commonwealth’s most stable counter-cyclical employers – health care and higher education,” Goodman said.

“This will make it more difficult to recover quickly this time, even if we manage to avoid a projected second wave of the COVID-19 virus later this year.”

Watching the Nation

AIM President and CEO John R. Regan, also a BEA member, said employers hope that Massachusetts can continue to re-open its economy without the surge in COVID-19 cases being seen in states like Texas and Florida.

“Essential companies and early stage re-opening companies continue to operate in a safe and efficient manner. The manufacturing sector, in particular, has adapted to new safety regulations in a way that should allow business to remain open and put people back to work,” Regan said.