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Confidence among Massachusetts employers strengthened for the first time in six months

Posted on March 7, 2022

Confidence among Massachusetts employers strengthened for the first time in six months during February amid a swirl of conflicting signals ranging from the abatement of Omicron to the Russian invasion of Ukraine.

The Associated Industries of Massachusetts Business Confidence Index (BCI) edged up 0.8 points last month to 56.7. The Index remains within optimistic territory and virtually identical to its level of a year ago.

More than three-quarters of responses came before Russia began military operations in Ukraine.

The Central Massachusetts Business Confidence Index, conducted with the Worcester Regional Chamber of Commerce, showed Worcester Country employers with a 58.1 confidence reading. The North Shore Confidence Index, conducted with the North Shore Chamber of Commerce, was 54.1.

The increase in employer confidence during February was driven by brightening views of both the state and national economies. The Massachusetts economy grew at an 8.2 percent annualized rate in the fourth quarter of 2021 while the US economy expanded at a 6.9 percent annual clip.

At the same time, Massachusetts companies face uncertainty from factors such as commodity inflation, the Federal Reserve’s anticipated move to raise interest rates and, now, potential fallout from economic sanctions against Russia.


“The COVID-19 pandemic has for two years been the dominant external factor in determining the outlook of employers, so it makes sense that confidence rose as Omicron cases declined in late January and  February,” said Sara L. Johnson, Chair of the AIM Board of Economic Advisors and Executive Director of Global Economics at S&P Global Market Intelligence.


“Despite the many uncertainties, employers remain confident about the prospects of their own companies in 2022.”


Labor shortages continue to trouble employers.


“Sales have greatly improved.  Inflation and supply chain issues persist.  Labor shortage getting people back to work remains an issue without much progress,” wrote one survey participant.


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.

Constituent Indicators 

The constituent indicators that make up the Index were mostly higher during February.

The confidence employers have in their own companies remained unchanged at 58.6 points, leaving it 0.4 points less than it was a year ago.

The Massachusetts Index assessing business conditions within the Commonwealth surged 2.4 points to 57.7, up 3.2 points since February 2021. The US Index measuring conditions nationally gained 2.2 points in February, leaving it just short of optimistic territory at 49.9.

Employers are more bullish about future business conditions than present ones. The Current Index, which assesses overall business conditions at the time of the survey, rose 1.4 points to 55.4. The Future Index, measuring projections for the economy six months from now, gained 0.2 points to 57.9

The Manufacturing Index dropped 6.7 points to 53.4 after jumping 4.8 points in January. The wide month-to-month swing may be the result of a statistical anomaly. The Manufacturing Index now stands 2.8 points less than a year ago.

Large companies (58.9) were more bullish than small companies (57.8) or medium-sized companies (53.8).

Barry Bluestone, Professor Emeritus of Public Policy and Urban Affairs at Northeastern University and a BEA member, said the persistent labor shortage reflects long-term demographic trends that will require a concerted approach by policymakers, business and educational institutions to align training with the skills needed by growing industries.


“There will be thousands of job opportunities during the coming years in areas such as advanced manufacturing, software, robotics and biosciences. The degree to which the economy will grow will be determined by our success in educating workers – particularly those traditionally left behind – with the skills needed for the new economy,” said Bluestone, who is part of a group expanding employment opportunities for students at Madison Park Technical Vocational High School in Boston.


Costs of War

AIM President and CEO John R. Regan, also a BEA member, acknowledged the human tragedy of the war in Ukraine while noting that the Russian invasion will exacerbate supply shortages and price increases.

“The primary economic consequence of the crisis will be additional upward pressure on an inflation rate that is already the highest in 40 years. Disruptions to the oil markets, uncertainty about grain supplies (Russia and Ukraine together supply a quarter of the world’s wheat), and inevitable increases in military spending will stress economies already struggling to keep up with demand,” Regan said.