Mass. Business Confidence Back Down Amid Uncertainty
As uncertainty over the economy and government policy grows, business confidence in the Bay State is falling, with the Associated Industries of Massachusetts’ (AIM) Business Confidence Index dropping 3.8 points in August, entering negative territory.
The reading of 48.7 is 6.5 points below where it was a year ago, AIM said.
According to Raymond G. Torto, chairman and CB Richard Ellis Group Inc. and chair of AIM’s Board of Economic Advisors, "The combination of mixed economic reports and recurrent policy uncertainties has meant a bumpy road for employer confidence."
He said the recent uptick in interest rates, though minor, has slowed the housing recovery and contributed to concerns about the Federal Reserve’s options going forward.
"We also see renewed Congressional deadlock with another debt ceiling crisis looming, and now the possibility of military intervention in the Middle East,” Torto said. “These national and global uncertainties come at a time when the Massachusetts economy is lagging – growth and job creation are at a near standstill, and consumer confidence is down locally while strengthening nationally. Once again, the weight of multiple uncertainties is holding down robust confidence."
On a 100-point scale, the AIM index is neutral at 50, positive above and negative below that mark.
AIM said all of the sub-indices fell in August, with most losses similar to the main index. The biggest decline was the Massachusetts Index, which assesses conditions within the state. It fell five points, to 44.4.
"There is no doubt that the state's economy has lost momentum in recent months," said Katherine A. Kiel, professor of economics at the College of the Holy Cross, and a BEA member. "The unemployment rate has been creeping back up, and the most recent employment report showed essentially no job creation."
The U.S. Index of national business conditions was down four points to 42.
"Since last August the Massachusetts Index is down nine points, the U.S. Index only two points," Kiel said. "One factor in this convergence is that the housing and automobile industries are less important here than they are nationally; as a result, Massachusetts suffered less than most states from their collapse, and is now benefiting less from their recovery."
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