Writer: Victor Cabrera
2 min read December 2022 — Business confidence in Massachusetts is up from last month, despite the persistent economic headwinds of high inflation and interest rates. The Associated Industries of Massachusetts’ (AIM) Business Confidence Index recorded a 7.8 point rise in confidence to 58.7 in November from October’s 50.9. AIM also reported a similar 5.7 point rise in national consumer confidence over the same period.
The index, which is based on a survey of more than 140 Massachusetts employers, is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative.
Contributing to the rise has been the job growth experienced in the lead up to the holiday season. The U.S. Labor Department announced last week that employers expanded payrolls by 263,000 jobs, significantly over economists’ expectations of 200,000 for November.
Massachusetts’s business confidence index reached its highest level since September 2021 and nearly 1 point higher compared to a year ago, reported the Berkshire Eagle.
In November, Retailers Association of Massachusetts President Jon Hurst told reporters that consumers “feel safe, and they want that experience to once again get out and shop face to face on their main streets and in their shopping districts across the commonwealth,” as cited by MassLive.
Elected leaders have also been supporting the encouraging messages from the retail industry, with Gov. Charlie Baker urging consumers to shop for their holiday needs. “I think in particular, given how hard the pandemic has been on all of these downtown and Main Street businesses, it’s particularly important for people to recognize and understand that when they invest in these companies and in these employees they are investing in their own neighborhoods, in their own communities,” Baker said, according to WVCB5.
While economists have reportedly cautioned against taking too much comfort in the state’s confidence boost for businesses, the positive sentiment provides some indication of the improved health of the Massachusetts economy against national economic troubles.
The Business Confidence Index survey responses balance optimism and challenges ahead. “I anticipate a ramp-up in bid opportunities with the federal infrastructure bill passing,” said one of the participants, citing BusinessWest, while another noted that “costs continue to be a major challenge, specifically in energy, utilities, health insurance, general insurance, overhead. Demand is steady, but it’s difficult to contain costs and maintain growth in profitability.”
As the year comes to a close, there is yet more uncertainty about the effect of job growth on the Federal Reserve’s efforts to curb inflation and of the Bay State’s new Millionaire Tax, which some fear might push wealthy investors to more tax-friendly environments. However, the Business Confidence Index’s rise provides some much needed reassurance for consumers and employers during the all-too-crucial holiday shopping season.
