Massachusetts employer confidence inched higher during May, reflecting an economy that has assumed a pattern of slow and steady growth.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.3 point to end the month at 48.2 on a 100-point scale. The increase left the Index virtually even with its level of May 2025.

Massachusetts employers have been pessimistic for more than a year, but the BCI has gained ground in each of the past two months.

Employers are watching carefully as the state and national economies continue to grow despite concerns about inflation, artificial intelligence and geopolitics. MassBenchmarks reports that the Massachusetts economy grew at a solid 3.2 percent annual rate (real GDP) during the first quarter despite little increase in payroll employment – testament to the commonwealth’s high level of productivity. This compares favorably with the national inflation-adjusted GDP growth rate of 1.6 percent during the same period.

Inflation, meanwhile, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 3.8 percent in April. Core PCE inflation, which excludes the more volatile food and energy components, measured 3.3 percent.

“Economic growth continues, but at a slower pace than in 2025. Consumer spending remains positive, supported by wage growth and low unemployment, but households are increasingly under pressure from higher prices, especially for energy and imported goods,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the Business Confidence Index.

Companies that participated in the BCI say caution is the watchword.

“While sales remain at steady levels, I’m not sure how long this will last. Along with the known tariffs is the destabilization of the government as a whole. ‘Uncertainty’ and ‘destabilization’ are not terms that inspire trust in the state or national economy,” wrote one manufacturing company.

Another commented: “Our product line is 90% imported. Our customers are holding off advance ordering until they know how they will be affected when they export their product… Collectively, we are all holding our breath until our government stops dithering around on how and when and what level of tariffs we can expect.”

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 mixed in May and ended the month at virtually the same levels as a year earlier.

The confidence employers maintain in their own operations slipped 2.7 points to 51.0. The figure was 0.2 point better than 12 months ago.

The Massachusetts Index, assessing business conditions within the commonwealth, surged 6.4 points to 46.3, leaving it 1.3 points higher than in May 2025. The US Index measuring conditions throughout the country rose 3.4 points to 42.0 – up 0.6 point for the year.

The Current Index, which assesses overall business conditions at the time of the survey, was virtually flat at 49.2 while the Future Index predicting conditions for the next six months increased 0.7 point to 47.3.

The Employment Index lost 2.9 points to close the month at 47.5. The Manufacturing Index fell 6.2 points after rising the same amount during April.

Medium-sized companies (49.4) were more confident than large companies (48.9) or small companies (44.4).

Ryan Hanna, Senior Vice President and Chief Investment Officer at Cambridge Wealth Management, a Division of Eastern Bank, and a BEA member, said financial markets remain strong, though increasingly volatile.

“Investor sentiment remains cautiously optimistic overall. Money has continued flowing into equity funds and corporate bonds, particularly in technology, industrials, and investment-grade fixed income. However, markets remain highly sensitive to inflation data, Federal Reserve policy expectations, geopolitical developments, and trade disputes,” Hanna said.

Data Privacy

AIM President and CEO Brooke Thomson, also a BEA member, suggested continued uncertainty about the economy underscores the need for Massachusetts lawmakers to adopt a consensus approach to data privacy that has been adopted in more than 20 states.

Restricting the data that supports the digital marketing ecosystem will increase costs, reduce effectiveness, and make it harder for Massachusetts businesses of all sizes to reach the customers necessary to grow” Thomson said.

“The consensus model protects consumers without imposing undue harm on businesses, non-profits, and other organizations.”