Employer Confidence Slips Back Into Pessimistic Zone

‘It Feels Like Everyone is Holding Out to See What Election Brings’

Confidence levels among Massachusetts business leaders tumbled into pessimistic territory in June for the first time in nine months.

The Associated Industries of Massachusetts business confidence index dropped 3.5 points to 49.8 last month, diving under the 50-point threshold that separates an overall optimistic outlook from a pessimistic one.

The June rating matched the September 2023 reading, but AIM cautioned against drawing too many conclusions from the survey.

“One constant in the AIM survey has been weak sentiment among manufacturers. Thus, most of the June deterioration was in service sectors, where post-pandemic recoveries are largely completed, and activity may be stalling,” said AIM Board of Economic Advisors Chair Sara Johnson.

Confidence levels varied across the state. Indices dropped in central Massachusetts from 50.6 to 46.8, rose in western Massachusetts from 44.8 to 50.3, and remained optimistic on the North Shore at 52.5.

State Street Global Advisors Chief Economist Simona Mocuta, a member of AIM’s board of economic advisors, said the data “suggest some urgency for the Federal Reserves to reduce interest rates.”

Several employers described a recent slowdown in new orders, according to AIM.

“No one is ordering. Quoting is active but ordering is only what businesses need at the moment,” one unnamed business said, per AIM. “It feels like everyone is holding to see what the election brings. In the meantime, we are reducing our work-force by 20 percent.”