Mass. business confidence at highest level since 2004

Grant Welker Construction on Front Street in downtown Worcester last month. Business confidence statewide is at its highest level in more than a decade.

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By State House News Service

Confidence among Massachusetts businesses inched up in March and employers remain bullish in the short term, but uncertainty is beginning to creep into the forecast, the Associated Industries of Massachusetts reported Tuesday.

AIM's Business Confidence Index rose 0.3 points to 62.4 in March, the seventh straight month of improved confidence and 5.9 points higher than a year ago. It is the highest level of confidence among Massachusetts businesses since August 2004, according to AIM.

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 Massachusetts Index, which assesses business conditions within the commonwealth, rose 0.5 points to 63.7, putting it 6.2 points higher than in March 2016. Business views of the national economy rose one point to 59.9, but February was the 83rd consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy, according to AIM.

"Massachusetts employers remain broadly confident about both the state and national economies," Raymond Torto, chairman of AIM's Board of Economic Advisors, said in a statement. "Slight declines in the Employment Index, the Manufacturing Index and projections about the economy six months from now perhaps reflect some of the uncertainty about the direction of economic policy in Washington."

AIM's Current Index, which measures overall business conditions at the time of the survey, surged 1.9 points to 61.8 last month while the Future Index, measuring expectations for six months from now, lost 1.4 points as it fell to 63.0.

Paul Bolger, president of the Massachusetts Capital Resource Company, noted that AIM's March survey was taken just as efforts led by President Donald Trump and congressional Republicans to repeal federal health reform collapsed, and suggested that could be a cause for concern in coming months.

"Employers have anticipated that a Republican Congress and a Republican president would deliver traditional pro-growth measures such as tax reform and infrastructure improvements," he said in a statement. "The failure of those parties to pass health-reform legislation seems to have created uncertainty about other legislative priorities that matter to employers."

AIM President and CEO Richard Lord echoed Bolger's suggestion and said that the uncertainty in Washington now hangs over Massachusetts as federal policymakers attempt to establish a direction in the wake of the Republican failure on what was to be the start of the new president's legislative agenda.

"Many growth industries in Massachusetts such as health care, higher education, research and defense, depend upon federal funding and are vulnerable to potential budget reductions," Lord said in a statement. "Discussion of transitioning Medicaid, the health-insurance program for low-income Americans, to block grants also has significant implications to the health care system that is already straining employers."

Though AIM said it is too soon to know what the significance is, the March business confidence survey found that western Massachusetts companies were more confident (63.6) than those in the eastern part of the state (62.2).

"Confidence outside of the white-hot Boston economy has been increasing steadily for months, but experts say it is too soon to say whether the geographic shift represents a long-term trend or a statistical anomaly," AIM wrote in its statement.