Business confidence notches up

The state’s business community is feeling just slightly more optimistic about the future than they have for the last couple of months, reversing a downward slide first seen in December and attributed to employee shortages.

“Business confidence remained essentially flat during February as employers attempted to gauge whether inflation, recession, growth or labor shortages would dominate the Massachusetts economy in 2023,” the Associated Industries of Massachusetts wrote in their February Business Confidence Index.

According to AIM, a decline in confidence seen in December and January was partially reversed last month, with overall employer sentiments growing by 0.3 points to 53.5%, a confidence level that is “3.2 points lower than a year ago but still in optimistic territory.” Confidence fell sharply in December, dropping a full 4.7 points to 54%. Confidence slipped again in January by 0.8 points, falling to 53.2%.

Employer sentiment continues to be driven by a swirl of often contradictory economic signals,” AIM wrote. “Leading indicators suggest that economic growth will decelerate during 2023, yet the state and national economies continue to exhibit a strong labor market, low unemployment, and a persistently high rate of inflation.”

The country added about half-a-million jobs to the economy in January, according to the Bureau of Labor statistics, and the unemployment rate is sitting at 3.4%, a 50-year low. That could and should be good news, but it’s also coming at a time of severely elevated inflation and making it hard for employers to find workers, according to Sara Johnson, chair of the AIM Board of Economic Advisors.