Business confidence drops to lowest level since 2016
Employer confidence in the economy continued its see-saw year in May, dropping more than three points and falling to its lowest point in two and a half years, according to Associated Industries of Massachusetts.
AIM's Business Confidence Index shed 3.2 points last month to fall to 57.1, its lowest level since October 2016 and 9.5 points below its mark from May 2018, according to a Tuesday press release. The index is presented on a 100-point scale, with 50 being neutral.
Analysts said every indicator in the index "showed a broad-based retrenchment during May," but the largest drop came in how businesses anticipate conditions will be six months from now. The nearly 10 point drop this year "has been driven largely by caution about the national economy and concern among manufacturing companies," AIM said.
Elmore Alexander, the retired dean of the Ricciardi College of Business at Bridgewater State University who is an economic adviser to AIM, said Massachusetts employers are showing concerns about sluggish national economic growth, geopolitical tensions around trade and slowing corporate spending.
"Few see an imminent recession, but most experts believe US economic growth will slow from 3 percent last year to 2.1 percent this year to 1.9 percent in 2020," he said.
AIM said it heard from member companies that said part of their concerns about six months from now is a new wave of state government regulations and the costs associated with them.
"The cost to operate has increased dramatically -- higher wages, benefit costs, supply costs and cost of compliance with all the new regulations coming out of State House," AIM said one employer wrote in response to its survey.
AIM is among a group of business and advocacy groups that have asked the administration and Legislature to delay the planned July 1 start of payroll tax contributions to fund the new family and medical leave law. Lawmakers said Monday they are giving serious thought to the delay, but are still undecided on it.
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