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Business confidence levels that bumped up and down in 2023 ended the year on the upswing.

Associated Industries of Massachusetts reported Monday that its monthly business confidence index gained 1.6 points to settle at 52.6 in December, hitting a nine-month high. The index ended 2023 1.4 points lower than it did at the end of 2022, but still above 50 and therefore in optimistic territory.

The business trade group cited “strong signals” of more moderate inflation, and Federal Reserve Chair Jerome Powell’s suggestion last month that interest rate increases appear to be over for now and that there may be rate reductions in 2024.

However, December’s report comes after many of the state’s bankers have been sounding pessimistic notes about the potential courses of their businesses and the local economy in 2024.

“The good news is that the pace of inflation has slowed noticeably since mid-2022. This should give the Fed some confidence that tighter monetary policy is working without widespread job losses,” Sara Johnson, chair of the AIM Board of Economic Advisors, said.

State tax revenue growth has softened substantially in recent months and AIM cited business contacts who are reporting slowed activity.

In a statement accompanying the index results, AIM President Brooke Thomson said Massachusetts needs a new economic development approach “that seamlessly melds competitiveness for the business community with affordability for the residents who work in our companies and live in the commonwealth.” The Healey administration is expected to file a major economic development bill this winter.

“Make no mistake, we must continue to prioritize the traditional pillars of economic development like advantageous tax rates, streamlined regulation and efficient permitting. But economic development must also address the soaring cost of everything from housing to childcare to health care, which is driving some of our best and brightest employees to less expensive regions of the country,” Thomson said.

In 2023, AIM’s business confidence index was in optimistic territory for all but three months – May, June and September.