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May 7, 2013

AIM: Business Confidence Makes Marginal Gains

Business confidence remained just above neutral in April, according to the Associated Industries of Massachusetts, ticking up four-tenths of a percentage point to 50.5.

That's still well below last April's AIM's Business Confidence Index reading of 57.1. Its all-time high of 68.5, on a 100-point scale, was reached in 1997 and 1998.

"The economy as a whole, and business confidence in Massachusetts along with it, is basically treading water," said Raymond G. Torto, global chief economist at CB Richard Ellis Group Inc. and chair of AIM's Board of Economic Advisors (BEA). "We're not going under, but we're not making much forward progress either. At the same time, there continue to be indications that the economy is rebuilding its core strength and preparing to forge ahead."

Torto noted that while economic growth was stronger both nationally and statewide in the first quarter of 2013 than in the same period last year, its strong start has been fading.

"Some key measures of current economic activity have leveled off or declined, including consumer spending, job creation, exports and the stock market," he said. "Indicators that might be seen as bearing more on resilience and stability than on dynamism – commercial and residential real estate values, for example, and initial unemployment claims – are still strengthening."

Like the main index, most of the sub-indices showed little change between March and April and all were down from last year. The only full-point advance was the U.S. Index of National Business Conditions, which was up 1.9 points to 42.4, but still down 6 points from last year.

The index of conditions within the commonwealth, typically higher than its national counterpart, was up just 0.1, to 47.7.

Meanwhile, the Current Index, which measures overall business conditions at the time of the survey, was up by 0.6 to 49.2. The Future Index, gauging expectations for the next six months, was up 0.2 to 51.8.

Confidence for employment the indicator also rose slightly, up 0.8 to 52.1, and the Company Index, which reflects respondents' assessments of conditions for their own businesses, held steady at 54.2.

"Employers are not planning much hiring at this point," said

BEA member Sara L. Johnson, senior research director of global economics at HIS Global Insight said employers are not doing much hiring as 20 percent plan to hire in the next six months, while 15 percent expect staff reductions and 64 percent foresee no change.

Confidence among manufacturers was similar to other employers, but up 1.5 points to 51.3.

"The rise in confidence among Massachusetts manufacturers is encouraging because national indicators show the sector slowing in April," Johnson said.

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AIM: Business Confidence Climbs Again

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