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April 3, 2019

Slow job growth, retirements chill biz confidence

Confidence levels among Massachusetts employers dipped in March, but remained firmly in positive territory.

Associated Industries of Massachusetts, in releasing its monthly index readings on Tuesday, said signs of a "cyclical global slowdown" and labor force constraints were behind a 0.3 percent drop in the index, which fell to 57.9 on a scale of 0 to 100. The index has shed 5.6 points in the past year.

AIM noted in its report that its survey took place "as the government announced that Massachusetts created only 20,000 jobs during 2018 instead of the 65,500 previously estimated." Citing federal data, AIM said average payroll growth in Massachusetts fell from 1.3 percent in 2017 to 0.9 percent in 2018.

"Massachusetts employers continue to struggle with the challenges of a full-employment economy complicated by demographic issues such as the retirement of large numbers of baby boomers," Raymond Torto, chair of AIM's Board of Economic Advisors, said in a statement. 

Payroll job growth is expected to slow to 0.6 percent in 2019, according to Northeastern University professor Alan Clayton-Matthews, citing the last New England Economic Project forecast, and labor force growth will slip to 0.4 percent, down from 1.6 percent in 2017. 

AIM's index assessing business conditions in Massachusetts has declined 6.1 points since March 2018, but gained 0.9 points in March, settling at 61.7. The index measuring optimism about hiring rose 1.2 points in March to 55.9.

AIM President Rick Lord said the expectation that Beacon Hill will take on transportation, public education and clean energy bills, which could carry major costs, has employers concerned about being asked to shoulder new costs.

"AIM undertakes these debates conscious of the oppressive cost burdens already facing Massachusetts employers," Lord said in a statement. "Massachusetts must develop a fair strategy to address its spending needs without harming employers who are already struggling to implement a $1 billion paid family and medical leave program along with the rising cost of both health insurance and energy." 

While there are many proposals pending, lawmakers are not locked in on any revenue plans to pay for their desired transportation and education investments.

All seven of AIM's monthly confidence indexes are down compared to a year ago, with the biggest drops occurring in the manufacturing index (10 points), the U.S. index (9.7 points), and the future index (7 points).

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