Business confidence bumps back up in May

Apartments under construction on Front Street in Worcester. Massachusetts business confidence rebounded in May after a decline in April.

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By State House News Service

After stepping back in April from March's 16-year high water mark, business confidence rebounded in May amid optimism for the next six months, the Associated Industries of Massachusetts reported Tuesday.

AIM's Business Confidence Index ticked up 0.6 points to 60.8 last month, resuming what had been a seven-month streak of improved confidence before April's decline. The index now stands 3.1 points higher than in May 2016.

"We were not surprised to see confidence readings correct slightly in April, and the May results suggest that employers still feel positive about the future," Raymond Torto, chair of AIM's Board of Economic Advisors, said in a statement. "In fact, employers seem to have more confidence in their own economic prospects than in the broader economies in which they operate."

The AIM index has been issued monthly since July 1991. It is presented on a 100-point scale, with a score of 50 being neutral. The all-time high of 68.5 was recorded in both 1997 and 1998, the group said, and its low was 33.3 in February 2009. The index has remained above 50 since October 2013.

The U.S. Index of national business conditions shed 2.3 points, falling to 57.2, the second month of decline. The Massachusetts Index, assessing business conditions within the state, lost 1.2 points to 62.1.

AIM found that 38 percent of responding employers expect to add staff in the next six months while 10 percent expect to downsize by the end of the year.

Sara Johnson, senior research director at Global Economics, said the expectation to hire in the next six months is an encouraging sign that could lead to bigger paychecks. "As optimism turns to hiring, the tight labor market is likely to put upward pressure on wages," she said in a statement.