While Massachusetts experienced some relief from economic uncertainty that plagued the beginning of 2025, business leaders still have a pessimistic outlook due to uncertainty regarding President Donald Trump’s tariff policies.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 6.3 points during May to end the month at 47.8. May broke a three-month slide and left the index 5.5 points lower than in May 2024. With the index being below 50 points, business confidence remains pessimistic.

“Uncertainty is the enemy of confidence,” Michael D. Goodman, professor of public policy at UMass Dartmouth and a member of the AIM board of economic advisors, said in a statement. “Federal actions that threaten Medicaid funding, reduce support for R&D and discourage immigration are weighing heavily on the commonwealth’s economic and fiscal outlook.”

The Massachusetts Index, assessing business conditions within the state, gained 7.1 points to 45.0. Even with the gains, the index is 8.8 points lower than in 2024. Large companies (50.8) were more optimistic than medium-sized companies (49.1) or small companies (42.4). 

The Manufacturing Index gained 4.6 points but remained 1.7 points lower than in May 2024. The Employment Index was the only element to decline during May, losing 0.4 points to end the month at 47.4. This follows an increase in the state unemployment rate to 4.6 percent in April from 4.4 percent in March.

“While sales remain at steady levels, I’m not sure how long this will last. Along with the known tariffs is the destabilization of the government as a whole,” wrote one executive from a manufacturing company. “I’m also worried about our people and how we can continue to support them financially. With sales being uncertain we may not be able to provide raises or bonuses as we have in the past. Our insurance costs will also increase, especially healthcare, so our people will have that increased cost to bear.”