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Image courtesy of Associated Industries of Massachusetts
After rising slightly in each of the previous three months, business confidence in Massachusetts took a significant tumble in May.
While still in optimistic territory, the monthly confidence index maintained by Associated Industries of Massachusetts fell 3.4 points to 54.7, its lowest level in 18 months and 7.2 points lower than one year ago.
AIM attributed the drop in confidence to rising interest rates, turbulent financial markets and recession possibilities. Analysts said concerns about the state and national economies drove the decline, with its U.S. index falling by 9.1 points. They contrasted April’s drop in the state unemployment rate to 4.1 percent with the economic contraction the state economy experienced in the first quarter and struggles among employers to find qualified workers.
“Massachusetts companies turned pessimistic about the national economy during May as inflation hit a 40-year high and major stock indices declined further,” said Sara Johnson, chair of the AIM Board of Economic Advisors. “Employers are now less confident about future conditions than present ones. At the same time, they remain optimistic about the prospects for their own companies.”
Edward Pendergast, managing director of Dunn Rush & Co., said Massachusetts companies spent two years dealing with COVID-19, but now face “a confusing intersection of challenges ranging from rising costs for materials to geopolitical instability.”
“We still see healthy merger-and-acquisition activity along with new companies growing into the economy, but employers must deal with an unusually large number of distractions as they try to do business,” Pendergast said.
