Business confidence edged up in June, but employers remain pessimistic overall amid concern over tariffs, tax policy and conflict in the Middle East.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 1.1 points during June to end the month at 48.9. It was the second consecutive monthly increase and left the Index 0.9 point lower than in June 2024.

A reading less than 50 on the 100-point Index indicates a pessimistic outlook.

The increase in confidence mirrored a strong recovery in US financial markets during June and an inflation rate that remained moderate. The job market was also resilient as US employers added a better-than-expected 147,000 jobs during June.

“The June Business Confidence Index reveals that employer attitudes about the private sector – the prospects for their own companies, employment and the manufacturing sector – are far stronger than views of the state and national economies,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

“Participant comments suggest that employers remain concerned about tariffs and the ability of the Trump Administration to conclude individual agreements with key trading partners.”

Tariffs were very much on the minds of participants in the confidence survey.

“Conditions cannot improve until we know the situation with tariffs. We have fewer customers making inquiries. Quoting items beyond our current inventory relies on future duties. Virtually all our product line must be imported,” wrote one manufacturing company.

Another company said: “Our company does a lot of work with the Federal government, and we have seen delayed payments and a decrease in opportunities. The tariffs are making it hard to respond to solicitations.”

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 

Almost all the constituent indicators that make up the Index gained ground during June, but with one exception, they all still registered a pessimistic reading. The confidence employers maintain in their own operations increased by 1.6 points to 52.4. That figure was 1.6 points better than in June 2024.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 1.2 points to 46.2, leaving it 3.5 points lower than a year earlier. The US Index measuring conditions throughout the country lost 0.1 point to 41.3, down 5.4 points from a year ago.

The Current Index, which assesses overall business conditions at the time of the survey, increased 1.8 points to 49.9. The Future Index predicting conditions six months from now was up 0.6 points.

The Manufacturing Index turned in the strongest performance in June, gaining 3.9 points to 48.2 – 3.2 points higher than in May 2024. The Employment Index rose 2.3 points to end the month at 49.7.

Medium-sized companies (51.2) were more optimistic than large companies (49.6) or small companies (45.6).

Elmore Alexander, Dean Emeritus of the Ricciardi College of Business at Bridgewater State University and a BEA member, noted that the June BCI survey was completed before Congress passed President Trump’s massive tax and spending bill.

“Employers support many of the tax provisions in the bill but remain concerned about budget reductions in the area of health care and research that could significantly affect the Massachusetts economy,” Alexander said.

Budget Balance

AIM President and CEO Brooke Thomson said last week’s concurrent budget debates in Boston and Washington, DC, underscored the profound fiscal uncertainty facing both the commonwealth and the nation as we head into the second half of 2025.

“All of this is a big concern for Massachusetts employers, who depend upon the government to manage its affairs prudently and minimize the tax burden on companies as they seek to grow and create jobs. The combination of budget uncertainty, shifting policy on tariffs and economic contraction in the commonwealth during the first quarter of 2025 is front-of-mind for employers,” Thomson said.