Mass. business confidence remained pessimistic for eight consecutive month in October

Massachusetts’ Business Confidence Index continued to tumble in October, reaching its third-lowest score in the past year. The state’s BCI fell 1.0 percentage points from a score of 47.5 in September to 46.5 last month. October marked the eight consecutive month in which the state’s BCI was in pessimistic territory, a streak that hadn’t occurred in the commonwealth since the pandemic in 2020, according to a Monday press release from the trade group Associated Industries of Massachusetts, which compiles the index. The AIM index pulls from a survey of more than 140 Massachusetts employers and is scored on a 100-point scale; a score of above 50 represents an optimistic outlook and a score below 50 represents a pessimistic outlook. In the past year, only two previous months had returned lower BCIs than October’s: March, which had a BCI score of 46.0, and April, which scored 41.5. While October’s score was in the red, the nation’s economy is resilient, said Sara Johnson, Chair of the AIM Board of Economic Advisors, in the release, quoting the Federal Reserve which said on Wednesday that economic activity has been growing at a moderate pace. “At the same time, the labor market is softening – employment has decelerated, and long‐term unemployment has risen. Because the labor market is a major pillar of consumer spending, any sign of widening job losses or weakening wage gains would be a red flag,” Johnson said in the release. Confidence in business conditions in Massachusetts and confidence in business conditions within the next six months were the only two indexes to grow last month, as the Massachusetts Index and Future Index rose to 43.3 and 46.7, respectively. While the state’s Company Index, the measure of confidence employers have in their own operations, fell 1.5 percentage points over-the-month, it was the only index of the eight reported to remain in positive territory, posting a score of 50.3. With a score of 38.2, the U.S. Index, reflecting owners’ confidence in the U.S. economy, was the lowest-scoring index last month. “Tariffs and reductions in research-and-development spending create issues for productivity while an aging demographic affects labor-force participation and tightening immigration policy affects population,” Alan Clayton-Matthews, professor emeritus of economics and public policy at Northeastern University in Boston, said in the release. Scoring 52.0, large companies were far more confident than medium and small companies, which scored 43.5 and 43.0, respectively. Even in the face of a bleak confidence score, Brooke Thomson, AIM president and CEO, sees the state’s newly-announced $400 million Discovery, Research and Innovation for a Vibrant Economy initiative as a great stabilizer to small businesses. “The DRIVE legislation sends a strong message that Massachusetts is committed to continuing our path as the global leader in innovation, research and education. DRIVE would also provide much-needed stability for the network of small companies, manufacturers and service providers that form the backbone of the Massachusetts life-sciences miracle,” Thomson said in the release. Mica Kanner-Mascolo is a staff writer at Worcester Business Journal, who primarily covers the healthcare and diversity, equity, and inclusion industries.