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Business Confidence Nears Pessimistic Territory in April

Posted on May 5, 2023

Embargoed for Release May 8, 12:01 am

Business Confidence Nears Pessimistic Territory in April

Massachusetts employer attitudes toward the economy shifted from optimistic to neutral during April amid concerns about the banking sector and continued interest rate increases designed to slow inflation.

Business Index

Business Index

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 1.4 points to 50.1 last month, its lowest level since December 2020. Confidence was 8.0 points lower than a year ago and essentially even with the 50 mark that separates optimistic from pessimistic outlooks.

Employers are seeing signs of slowing business activity after 10 consecutive interest-rate increases from the Federal Reserve. Another sign of that slowdown came last week when Massachusetts officials reported that corporate and business tax collections fell 3.0 percent in April from the same month in 2022. And tightening credit conditions pose downside risks to the region’s commercial real estate market

“Businesses report that some customers are postponing buying decisions as they evaluate whether the economy is headed for a soft landing or a recession. At the same time, however, the report on Friday that US employers created 253,000 jobs in April shows that the employment market continues to defy the gravity of any slowdown,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors.

Participants in the Business Confidence Index Survey expressed a wide range of concerns.


“Perhaps a soft landing, but I predict a big challenge will be here at the end of the summer or in the fall,” wrote one employer in the service sector.

Another employer added: “Most business owners are worried about what the future holds. Many are beginning to tighten up their spending.”

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.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, fell 1.4 points to 50.3 while the North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, declined from 54.9 to 48.2. The Western Massachusetts Business Confidence Index, developed in collaboration with the Springfield Regional Chamber of Commerce, rose to 55.4.

Constituent Indicators 

The constituent indicators that make up the Index were mostly lower in March.

The confidence employers have in their own companies fell 2.4 points to 53.2, ending the month 6.8 points below April 2022.

Business Index

Business Index

The Massachusetts Index assessing business conditions within the Commonwealth lost 0.7 points to 48.6, down 8.7 from a year earlier. The US Index measuring conditions throughout the country rose 1.4 points to 42.4 but remained in pessimistic territory for a seventh consecutive month.

The Current Index, which assesses overall business conditions at the time of the survey, fell 1.4 points to 51.5. The Future Index, measuring projections for the economy six months from now, lost 1.2 points to end the month at 48.8.

The Manufacturing Index edged down 0.2 points to 48.7. Confidence among non-manufacturing companies was down 2.2 points to 51.1.

The Employment Index fell 3.2 points to 51.6, potentially signaling some easing of a persistently tight labor market.

Large companies (51.9) were slightly more optimistic than small companies (50.8) or medium-sized companies (49.0).

Barry Bluestone, retired Professor of Public Policy and Urban Affairs at Northeastern University and a BEA member, said the mixed economic signals should not distract Massachusetts from addressing the important long-term workforce issues facing its economy.

“Massachusetts will ultimately succeed by ensuring that the workers who drive growth have the skills needed by the economy and have the opportunity to find housing that allows them to remain here in the commonwealth,” Bluestone said.

Debt Ceiling

AIM President and CEO John R. Regan, and a BEA member, said employers are also increasingly concerned about the standoff between the White House and Congressional Republicans about raising the debt ceiling.

“Employers may disagree about federal spending, but no one disagrees that hitting the debt limit will cause significant economic damage. The members of AIM join others in calling upon elected officials to set aside their disagreements and find a solution,” Regan said.

Business Index

Business Index

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.  Several component sub-indices are derived by analyzing responses to selected questions or those of 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

Marcelo Suarez-Orozco, Chancellor, University of Massachusetts, Boston (617) 287-6800
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