AIM: Mass. Business Confidence Down In Feb.
Business confidence edged down a bit in February, with the Associated Industries of Massachusetts Business Confidence Index dropping 1.4 points, to 49.0. That pushed the index from positive to negative territory on the 100-point scale.
"We saw a marginal uptick in the assessment of national conditions coming off of January's federal tax agreement, but otherwise the numbers were down a little across the board," said Raymond G. Torto, global chief economist at CB Richard Ellis Group Inc. and chair of AIM's Board of Economic Advisors (BEA). "Massachusetts employers face growing uncertainties locally, nationally and globally, leaving the index down 5.9 (points) from its reading last February."
He went on to say that, while the survey results are not "doom and gloom," they "reflect a very unsettled situation for businesses."
He said businesses are facing more fear as federal spending cuts, also known as sequestration, kick in, affecting the state's economy.
"Government programs and employment at all levels will take a hit, but our state has disproportionate exposure in the private sector," Torto said. "Defense contractors are already feeling spending reductions, and higher education and health care are bracing for cuts – these are very important components of our state's economy."
Adding to the economic pressure of the Bay State are that key export markets in Europe are in or on the brink of a recession and the state's fiscal 2014 budget remains unclear.
According to AIM, all but one of its sub-indices were down 1 to 2 points in February. All were down over the year.
The positive note was the U.S. index of national business conditions, which was up four-tenths of a point to 42.0.
"The tax agreement and other expressions of comity in Washington, along with positive signs in the equities and housing markets, buoyed hopes at least through the middle of the month," said BEA member Fred Breimyer, a regional economist for the Federal Deposit Insurance Corporation.
The Massachusetts Index of conditions within the commonwealth was off 1.8 points to 45.4, but stayed ahead of U.S. conditions. Breimeyer said there was only one month in the past five years – May 2009 – when the Massachusetts Index lagged the U.S. Index.
Meanwhile, the Current Index, assessing overall conditions at the time of the survey, dropped 1.5 points to 47.4, and the Future Index, measuring conditions for six months ahead, declined 1.2 points, to 50.7.
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