Mass. business confidence rose in August, remains pessimistic
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Business confidence in Massachusetts continued to yo-yo in August, improving slightly yet remaining in pessimistic territory for the sixth consecutive month.
The commonwealth’s Business Confidence Index ascended 0.4 points in August to 49.0, a score two points lower than in August 2024, according to a Tuesday press release from the trade group Associated Industries of Massachusetts, which compiles the index.
The AIM index pulls from a survey of more than 140 Massachusetts employers and is scored on a 100-point scale; a score of above 50 represents an optimistic outlook and a score below 50 represents a pessimistic outlook.
August’s score comes during a year in which the state’s business confidence has been volatile, never trending upward or downward consistently for more than three months since August 2024.
“The overall economic picture is complex, featuring a resilient stock market driven by AI optimism that contrasts with weaker consumer sentiment and a cautious Federal Reserve, which may cut interest rates soon. That complexity continues to color business confidence in Massachusetts,” Sara Johnson, chair of the AIM Board of Economic Advisors, which oversees the BCI, said in the release.
AIM reports the Federal Reserve Chair Jerome Powell said on Aug. 22 that the policy interest rate may dip by September.
“Emerging technologies like AI are reshaping entire industries. Changes in federal policy and funding streams have hamstrung the research, medical, and innovation industries that have long underpinned the state economy,” AIM President and CEO Brooke Thomson said in the release.
Tariffs continue to remain a threat, Thomson said, noting Massachusetts companies sell $35 billion in goods and $42 billion in services each year to international markets.
“Central banks are walking a tightrope between fighting inflation and supporting growth,” said Thomson.
The confidence Massachusetts employers have in their own companies was once again the only AIM index to score in positive territory. The index held steady in August, remaining unchanged from July’s score of 51.6.
The index analyzing employer confidence in the U.S. economy rose the most of the indexes analyzed last month, growing 1.9 points to 44.6. While still in pessimistic territory, August's U.S. economy score was substantially higher than in April, when it dropped to a 16-year low of 29.6.
Confidence employers had in the Massachusetts economy was slightly higher than their outlook on the nation’s, with August returning a score of 45.6, which is 0.1 points higher than in July.
While all sized companies remained in pessimistic territory, small companies were more optimistic than others, scoring 49.7, while large and medium companies scored 49.5 and 47.4, respectively.
“Despite all the tariff and policy uncertainty, jobs are still being created, and consumer spending is still rising (albeit both at a slower pace than we saw last year). That’s not a bad starting point for the rest of this year,” Michael Tyler, vice chair of the BEA, said in the release.
Mica Kanner-Mascolo is a staff writer at Worcester Business Journal, who primarily covers the healthcare and diversity, equity, and inclusion industries.
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