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May 7, 2024

Central Mass. business confidence tumbles into pessimistic territory, nears all-time low

Photo | Timothy Doyle Downtown Worcester

Hope might spring eternal, but the spring of 2024 hasn’t brought much hope to Central Massachusetts businesses. 

The Central Massachusetts Business Confidence Index took a tumble in April, as it fell from a 51.9 score in March to 45.9, according to figures from the trade group Associated Industries of Massachusetts released Monday. Scored on a 100-point scale, an index number above 50 represents an optimistic outlook, while a number below 50 represents a pessimistic outlook.

April’s score of 45.9 is the second lowest the monthly index has been since AIM launched the region’s versions of its statewide business confidence index in November 2021 in partnership with the Worcester Regional Chamber of Commerce. The lowest score was 45.7 in October.

AIM has released a monthly statewide index since 1991.

Participants in the monthly survey pointed to high interest rates, rising labor costs, inflation, and softening demand as causes of concern.

“Employers and consumers alike are experiencing persistent inflation and slowing economic activity, leading to increased caution,” Sara Johnson, chair of the AIM Board of Economic Advisors, said in the press release. “The good news is that real private consumption and investment have continued to rise, while the job market has come into better balance.” 

For April, the statewide business confidence index also declined, dropping 0.3 points to 51.9. In other regions throughout the state, the Western Massachusetts Business Confidence Index fell from 50.5 to 48.4, and the North Shore Confidence Index remained optimistic, rising from 56.0 to 59.6.

Following a trend seen in March, big companies feel more optimistic than smaller companies about the current state of business. The statewide index for large companies came in at 58.9, while medium-sized companies scored 50.4. Small companies were the least optimistic, coming in at 45.3.

Despite the pessimism, the less-than-rosy economic outlook hasn’t yet caused a slowdown in the number of businesses being formed in the state.

“Census data tell us that the rate of business formation in Massachusetts has remained steady during the past two years. That doesn’t mean that entrepreneurs don’t face challenges in the current economy, but activity and energy remain strong,” Suzanne Dwyer, president of  Boston-based Massachusetts Capital Resource Company, said in the AIM press release.

This trend of new business formation has been seen in Central Massachusetts, where more business incorporated in January 2024 than any month since at least 2017. 

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