Massachusetts employers turned optimistic in February for the first time in a year.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 5.5 points to end the month at 52.0 on a 100-point scale. The increase left the Index 1.6 points better than its level a year earlier.

Analysts warned against reading too much into a single month but noted that underlying economic signals remain stable. The survey was taken before the onset of the conflict in Iran.

“The February upturn in business confidence was broadly based, supported by strong gains in labor productivity and company earnings. Deployment of artificial intelligence – especially at large companies – is boosting productivity and helping Massachusetts employers cope with labor supply constraints. Meanwhile, sustained economic growth and federal tax policies are encouraging business investment,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the Business Confidence Index.

Companies that participated in the BCI continued to express concern about issues such as tariffs and inflation, but several also pointed to positive signs.

“We anticipate that the new tax bill that was recently passed should help our employees and our business,” wrote one company in the transportation industry.

A construction company commented: “Plenty of work out there, however financing is slowing down the starting of multi-family projects.”

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 all rose during February.

The confidence employers maintain in their own operations gained 4.1 points to 55.5. The February figure was 1.6 points better than a year earlier.

The Massachusetts Index, assessing business conditions within the commonwealth, increased 6.3 points to 45.3, leaving it 1.2 points below the level from February 2025. The US Index measuring conditions throughout the country surged 7.8 points to 47.9, almost four points higher for the year.

The Current Index, which assesses overall business conditions at the time of the survey, rose 5.6 points to 51.7. The Future Index predicting conditions for the next six months was up 5.0 points into optimistic territory at 52.2.

The Employment Index increased 2.0 points to close the month at 51.9. The Manufacturing Index jumped 3.7 points to 50.4.

Large companies (54.0) were more confident than medium-sized companies (51.7) and small companies (50.3).

Michael D. Goodman, Professor of Public Policy at UMass Dartmouth and a BEA member, said the board will watch closely during the next several months to determine whether the apparent rise in confidence is sustainable.

“The reported uptick in confidence is welcome, but these results largely predate the military conflict in the Middle East. That matters. Continued conflict has direct implications for energy prices, inflation, and supply chains—all of which weigh heavily on business confidence,” Goodman said.

Emphasis on Costs

AIM President and CEO Brooke Thomson, also a BEA member, said employers remain concerned about the cost of everything from energy to housing to health care in Massachusetts. The state House of Representatives recently passed legislation that seeks to curb rising energy costs and strengthen the oversight of existing energy efficiency programs.

“AIM thanks the House for its work on this bill as well as its continued efforts to curb costs and make energy more affordable for residents and businesses in Massachusetts. These are real issues for companies and employees alike. The effort to stem the outmigration of working-aged residents begins with moderating costs that make Massachusetts and outlier among states,” Thomson said.