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August 6, 2013

Mass. Business Confidence Rebounds

A key measure of business confidence in Massachusetts rose in July, reaching its highest level since August 2012, according to the organization that publishes a monthly survey of state businesses.

The Associated Industries of Massachusetts (AIM) Business Confidence Index advanced 3.6 points last month to 52.5 on a 0-to-100 scale, recouping June’s loss and moving back into positive territory, above 50.

"The economy has become more stable if not more dynamic, and business confidence is more resilient," said Raymond G. Torto, chairman at CB Richard Ellis Group, Inc., the chair of AIM’s board of economic advisors (BEA). "We've seen mid-year drops in each of the last four years, but the brief dip in 2013 contrasts favorably with the more prolonged declines in 2010 and 2011."

But Torto said Bay State employers still have a high level of uncertainty, which he said is “particularly damaging to confidence because it is unpredictable and generally unmanageable.

“The persistent pattern of halting growth and policy frustration, though now familiar, continues to weigh down on business confidence," he added.

AIM’s sub-indices, which are based on selected questions or respondent characteristics, all rose in July after falling in June, with most coming close to their levels of July 2012. The Current Index, which tracks employers’ assessments of existing business conditions, and the Future Index, which measures expectations for the next six months, each added 3.6 points, to 51.9 and 53.1 respectively.

While those numbers are the same as they were a year ago, both numbers are above 50, and the fact that the Future Index is higher points to improvement, according to Michael A. Tyler, chief investment officer at Eastern Bank Wealth Management, a BEA member.

Other Positive Indicators

Other AIM indices cited more confidence among businesses in their own operations, as well as sales and employment. “Employers were significantly more positive about their own positions in July, especially those with more than 100 employees,” said BEA member Sara L. Johnson, senior research director of global economics at IHS Global Insight, "but few rate general business conditions in the state and nation as 'good.’”

Meanwhile, employers who report adding staff in the past six months outnumber those with reductions (24 percent to 16 percent), Johnson said.

Read more

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