Business confidence declined slightly during December, though the overall outlook among Massachusetts employers remained optimistic at year-end 2024.

The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 2.3 points to 55.4 after hitting a two-year high the previous month. The BCI ended the year 2.8 points higher than in December 2023.

“The consistent optimism of employers in Massachusetts reflects the fact that the economic expansion remains on solid footing. Following the November election, businesses are more confident that federal tax policy will remain supportive of investment,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

“However, companies signaled caution about increasing employment. There is also caution about the competitive position of Massachusetts, with the state index trailing the US index for four months.”

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.

The December survey came as the US Federal Reserve Board cut interest rates by 25 basis points, signaling progress toward its dual goals of maximum employment and price stability. At the same time, the Fed introduced a new qualifier on the “extent and timing” of future rate cuts, suggesting a slower pace in 2025 than previously anticipated.

The Massachusetts unemployment rate stands at 4 percent as employers added 27,100 jobs between November 2023 and November 2024.

Confidence varied regionally across the Commonwealth. The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, rose from 52.7 to 57.9; the Western Massachusetts Business Confidence Index, developed in collaboration with the Springfield Regional Chamber of Commerce, remained unchanged at 53.2; and the North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, gained two points to 59.0.

Constituent Indicators 

The constituent indicators that make up the Index were uniformly lower in December.

The confidence employers have in their own companies was down 2.8 points to 55.4. That figure was 2.6 points better than in December 2023.

The Massachusetts Index assessing business conditions within the Commonwealth lost 1.7 points to 55.0, leaving it 0.4 point higher than a year earlier. The US Index measuring conditions throughout the country declined 1.6 points to end the month at 55.8.

The Current Index, which assesses overall business conditions at the time of the survey, lost 1.5 points to 56.3. The Future Index predicting conditions six months from now moved down 3.1 points to 54.5.

The Manufacturing Index, which has lagged overall confidence readings for much of the year, slid 0.5 points to 52.3. The Employment Index dropped 2.2 points to 51.4.

Large companies (58.3) were more optimistic than small companies (55.5) or medium-sized companies (52.1).

Nada Sanders, Distinguished Professor of Supply Chain Management at Northeastern University, and a BEA member, said tariffs are clearly on the minds of the employers who participated in the survey.

“These companies source materials globally, manufacture globally and sell globally. Each of those elements could potentially be affected by the imposition of tariffs,” Sanders said.

Eventful Session

AIM President and CEO Brooke Thomson, also a BEA member, said the Massachusetts Legislature closed out an eventful 2024 on December 30 by passing a bill to increase financial transparency of health-care providers.

“That measure came on top of a multi-billion housing bond bill, a comprehensive energy siting bill, a wage-transparency bill and a $3.9 billion economic-development measure – all of which added up to a significant year for the Massachusetts economy. We thank our partners on Beacon Hill for their continued support for delivering results for our members,” Thomson said.