Mass. Business Confidence Slips

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By Rick Saia

Confidence among Massachusetts businesses ebbed slightly in May, a month after it reached its highest level in five years, according to the Associated Industries of Massachusetts (AIM).

AIM's Business Confidence Index edged downward three-tenths of a point in May, to 56.8, although it's more than 5 points better than its reading in May 2011.

AIM officials indicated that it's hard to determine what the drop means for the Bay State economy.

The decline "could turn out to be a brief stutter, a leveling off or the start of a mid-year slump in confidence such as occurred in each of the past two years," said Raymond G. Torto, global chief economist at CB Richard Ellis Group Inc., the chair of AIM's board of economic advisors. "What is evident is a lack of sustained upward momentum in the economy, even though business conditions and business confidence have improved over time."

Most employers responding to the survey – 53 percent – said current conditions for their operations are "good," which Torto said was the best number AIM has seen since 2007. "Yet hiring expectations are weaker than they were at times in 2011 and 2010," he added. "Disquieting financial news from Europe, stock market declines, weaker national consumer confidence in the U.S., and perhaps the upcoming elections all contribute to a sense of uncertainty that has kept business confidence within a moderately positive range."

AIM's Business Confidence Index has been issued monthly since July 1991. Presented on a scale on which 50 is neutral, its historical high was 68.5, attained in 1997 and 1998, while its all-time low was 33.3 in February 2009.