Mass. Employers Grew Less Confident in March
APRIL 9, 2024….Confidence among Massachusetts employers stumbled in March for the first time in four months, but remained in optimistic territory, according to the latest survey from an industry group.
The Associated Industries of Massachusetts Business Confidence Index dropped to 52.2 last month, a decline of 2.3 points from the 11-month high recorded in February.
Employers who participated described concerns about high interest rates, rising labor costs, inflation and softening demand, according to AIM. The index sits 0.7 points higher than it was in March 2023.
One unnamed company warned in its survey response that “large scale commercial construction will be hurting,” and another called the economy and their prospects “stable but still problematic,” AIM said.
“The Fed has signaled that it expects to reduce its key interest rate three times during 2024 despite stronger-than-expected price increases during January and February,” said AIM Board of Economic Advisors Chair Sara Johnson. “Financial markets have already priced in the three rate cuts, which should help the economy as we move through the year.”
The index measures confidence on a 100-point scale, and a score of 50 marks the dividing line between a pessimistic outlook and an optimistic outlook.
Massachusetts businesses appear to be more upbeat about their prospects within the Bay State. The U.S. index fell from 50.6 in February to 47.3 in March, according to AIM, tilting into pessimistic territory. That’s still a better score than the same time last year: the national index landed at 41 in March 2023.
Another industry group, the National Federation of Independent Business, said Tuesday that its own survey pings small business optimism in the United States at the lowest level since December 2012.
“Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly,” said NFIB Chief Economist Bill Dunkelberg.
Nada Sanders, a Northeastern University professor of supply chain management, said new challenges like the dramatic collapse of the Key Bridge in Baltimore are adding to pressures.
“Baltimore is a primary processing point for imported autos and small trucks, but other East Coast ports should be able to help in the short run — at least until the bridge wreckage is cleared,” Sanders said in a statement provided by AIM. “However, if this situation drags on it will create economic impacts both on the East Coast and domestically.”
With a financial crisis at Steward Health Care and health care spending outpacing benchmarks, AIM President Brooke Thomson said Bay State businesses continue to struggle with health care costs.
Legislative leaders have floated plans to rein in prescription drug prices and to expand oversight of hospital system expansions, but House and Senate Democrats do not agree on a comprehensive path forward to address health care concerns.
“The challenges facing the health care and health-insurance systems in Massachusetts have been years in the making and will take years to resolve,” Thomson said. “AIM remains committed, however, to rolling up its sleeves and working toward a solution that preserved Massachusetts’ unique global health system without bankrupting the employers who pay most of the bills.”
