Business confidence down despite record jobs numbers
Employer confidence continued to fall in Massachusetts last month, according to a recently released survey conducted by a Bay State business association, continuing a trend first seen it the end of 2022.
“A strong performance by the Massachusetts economy during the fourth quarter of 2022 was not enough to stem a twomonth decline in business confidence among employers still concerned about a slowdown in 2023,” the Associated Industries of Massachusetts said in its latest Business Confidence Index.
According to AIM, a decline in business confidence among employers seen in December continued through to the new year, with confidence slipping 0.8 points to 53.2%. That is far less of a decline than was seen in the prior report, when confidence slipped a full 4.7 points from a November high of 58.7%.
AIM says 53.2% confidence still signals “overall optimism,” but that employers are expressing their concerns about the future.
“Employers remain wary even though the Massachusetts economy grew at a 3.1 percent annual rate and the US economy at a 2.9 percent annual rate during the fourth quarter. Companies are concerned that efforts by central banks to moderate inflation by raising interest rates might slow the economy, perhaps into recession,” the report reads, in part.
The newest Business Confidence Index comes following Friday’s announcement the U.S. labor market saw more than half-amillion jobs added despite the fact the tech industry was experiencing rounds of layoffs and the Federal Reserve continued to hike interest rates, this time by another quarter point.
“The good news is that 12-month consumer price inflation moderated to 6.5 percent in December from a high of 9.1 percent in June 2022,” Sara Johnson, AIM’s chief economic advisor, said with the report’s release.
“However, measures of core inflation (excluding food and energy) remain well above rates that are consistent with the Federal Reserve’s 2% inflation target. While the Fed slowed the pace of interest rate increases to just a quarter point last week, it signaled that further rate hikes are coming,” she continued.
Employers, AIM says, are feeling the other end of any good news in the labor market.
“Job vacancies remain at historic highs, with two openings for every unemployed person,” January’s index reads.
The unemployment rate is currently 3.4%, according to the Bureau of Labor Statistics, the lowest it has been since 1969.
AIM surveys more than 140 Bay State businesses to produce their monthly index, which they have published for more than three decades. According to AIM business confidence hit historic highs in 1997 and 1998, with two months in either year showing 68.5% confidence, and hit a low in February of 2009, when it was 33.3%.