Massachusetts employers remained pessimistic for a third consecutive month in October, despite being upbeat about hiring.

The Associated Industries of Massachusetts Business Confidence Index (BCI) fell 1.0 point to 47.6 on a 100-point scale. Confidence ended the month 1.1 points less than in October 2025 and slightly below the 50 mark that separates optimism and pessimism.

Companies remain sanguine about their own prospects, but confidence is being weighed down by concern about the national and state economies. The measure of confidence in the national economy hit its lowest point in October since the announcement of “Liberation Day” tariffs in April 2025.

The only element of the BCI to improve during October was the Employment Index, which ended the month 5.6 points better than a year earlier.

“The U.S. economy is showing a mix of continued economic growth, persistent cost pressures, and uncertainty about the direction of interest rates. While consumer spending and business investment have provided support, households and employers continue to face elevated costs, borrowing expenses, and an uncertain economic outlook.” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the Business Confidence Index.

Companies that participated in the October survey were acutely aware of the economic crosscurrents.

“Although we expect sales to continue to trend upward slightly to moderately, we do not expect business conditions for us to improve dramatically, as it would typically do, with increased revenue…Commercial insurance, healthcare benefits, wage compression, utility costs and even IT costs are impacting our organization and many of our clients,” wrote one service company from western Massachusetts.

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 lower during October.

The confidence employers maintain in their own operations slid 0.5 point to 52.8 – still 2.5 points higher than in October 2025.

The Massachusetts Index, assessing business conditions within the commonwealth, lost 2.2 points to 42.5, down 0.8 point from 12 months earlier. The US Index measuring conditions throughout the country declined 1.3 points to 37.3, ending the month 0.9 point lower than a year ago.

The Current Index, which assesses overall business conditions at the time of the survey, lost 1.3 points to 50.0 while the Future Index predicting conditions for the next six months fell 0.7 point to 45.2.

The Employment Index gained 1.6 points to 54.1, up from 48.5 in October 2025. The unemployment rate in Massachusetts has remained steady at 4.3 percent for the past two months.

The AIM Manufacturing Index fell 2.6 points to 48.1.

Medium-sized companies (51.1) were more confident than large companies (47.8) or small companies.

Narrowing Margins

AIM President and CEO Brooke Thomson, said that the Federal Reserve Board’s decision last week to leave interest rates unchanged is a positive for business, but that surging prices for energy and other inputs continue to be a concern.

“We hear again and again from our members that inflation is squeezing margins and also causing worries for employees as we enter the winter heating season,” Thomson said.