Business confidence was virtually unchanged during January as Massachusetts employers remained pessimistic for an 11th consecutive month.

The Associated Industries of Massachusetts Business Confidence Index (BCI) inched down 0.2 point to 46.6 on a 100-point scale. The Index ended the month 9.0 points below its level a year earlier.

Confidence was weighed down by continued concern about tariffs, federal immigration enforcement and the cost of doing business in Massachusetts. The economy, meanwhile, remained resilient with projected 2026 GDP growth estimated at 2.1-2.3 percent.

“Consumer spending was solid in October and November, and retailers reported a good holiday shopping season. Reports indicate that consumer spending was especially strong in late December and into January,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

“At the same time, the December 2025 jobs report released in January showed a slowdown in hiring, with only 50,000 jobs added. Private-sector growth was minimal outside of health care.”
Companies that participated in the BCI expressed concerns about developments at both the state and national levels.

“The incoming tariffs have many of our customers afraid to place orders,” wrote one company just north of Boston.

Another commented: “Massachusetts continues to be a very high-cost state to do business.”

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

The constituent indicators that make up the Index were mostly unchanged during January.

The confidence employers maintain in their own operations was flat at 51.4, the only element of the Index in optimistic territory. The January figure was 5.9 points less than a year earlier.

The Massachusetts Index, assessing business conditions within the commonwealth, lost 0.6 point to 39.0, leaving it 14.1 points below the level from January 2025. The US Index measuring conditions throughout the country was unchanged at 40.1, almost 13 points lower for the year.

The Current Index, which assesses overall business conditions at the time of the survey, was also unchanged, at 46.1. The Future Index predicting conditions for the next six months was off 0.3 point to 47.2.

The Employment Index was the only segment to strengthen, gaining 0.6 point to close the month at 49.9.

The Manufacturing Index was flat at 46.7.

Large companies (48.6) were more confident than medium-sized companies (46.8) and small companies (44.4).

Nada Sanders, Distinguished Professor of Supply Chain Management at Northeastern University, and a BEA member, said employers are anxiously awaiting a decision by the United States Supreme Court on whether the president has the authority to impose tariffs under the International Emergency Economic Powers Act.

“Companies that participate in the Business Confidence Index continue to say that uncertainty over tariffs is making some customers reluctant to move forward with orders. At the same time, the latest data on producer prices indicate that the rising cost of imports is working its way through the economy,” Sanders said.

Prescription for Growth

AIM President and CEO Brooke Thomson, also a BEA member, said the association continues to work with elected officials – including the Healey-Driscoll Administration and the Massachusetts legislature – to moderate the high cost of living that is driving many young working families to other states.

“The message from the Massachusetts business community to state government is clear for 2026: Maintain budget stability and impose no new taxes on businesses; address energy affordability through an all-of-the above approach; and create a comprehensive framework for data privacy that safeguards consumers’ person information while preventing unintended consequences,” Thomson said.