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Employers Expect Happy New Year

Posted on December 2, 2014

Improving economic fundamentals and the prospect of successful divided government in Massachusetts have left Bay State employers feeling merry about 2015.

BCI.November.2014The Associated Industries of Massachusetts Business Confidence Index rose 1.9 points in November to 56.8, leaving it with a gain of 6.6 for the year. More important, however, was the fact the employer sentiment about the next six months soared 4.3 points to 58.5, while confidence among executives in the condition of their own companies rose 2.8 points to 59.7.

“Survey respondents look forward to better conditions by next spring, in line with most economic forecasts,” said Fred Breimyer, regional economist at the FDIC.

“It is surprising that problems in the global economy ” recession or near-recession in Europe and Japan, and slowing growth in China ” are not enough to put a damper on these expectations.”

Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC, said gains in the Employment Index and Sales Index for November point to sustained job growth next year.

“Respondents reporting staff additions over past six months outnumber those recording cuts by almost two-to-one (31 percent-17 percent), and the expected ratio in the coming six months is better than three-to-one (32 percent-10 percent),” Winer said.

The November BCI ended just shy of the Index’s post-recession high of 57.1 reached in April 2012.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

Employers continue to be more optimistic about the Massachusetts economy than the national – the U.S. Index of business conditions nationally was off nine-tenths at 49.7, while the Massachusetts Index of conditions within the commonwealth gained 1.8 points to 55.1. Analysts say that gap reflects the view of employers that Governor-Elect Charlie Baker and Democratic legislative leaders will work across party lines far more smoothly that the two parties in Washington.

“There is little indication of concern about having a governor of one party and a legislature controlled by the other,” said Richard C. Lord, President and Chief Executive Officer of AIM.

“On a special survey question, 54 percent of respondents replied that they expect divided government to work better on Beacon Hill than in Washington, and another 28 percent thought it could be productive at both levels.”