Employer confidence weakened in Massachusetts during May amid renewed trade tensions and concerns among companies about increased operating costs from paid family leave and other government mandates.
The outlook among business leaders has moved in a narrow, overall optimistic, range for much of 2019.
The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 3.2 points last month to 57.1, its lowest level since October 2016. The Index has declined 9.5 points since May 2018.
All of the constituent indicators that make up the BCI weakened during May with the largest drop coming in employer views of conditions six months from now.
The erosion of confidence during the past 12 months has been driven largely by caution about the national economy and concern among manufacturing companies.
“The Business Confidence Index continues to reflect the Goldilocks economy in which we find ourselves – US GDP growth is expected to remain at a modest level of 2 to 3 percent and there is not much inflation or deflation. There are both encouraging signs and red flags,” said Raymond G. Torto, Chair of AIM’s Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.
Several employers participating in the survey said regulatory costs have become a significant concern.
“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,” one employer wrote.
The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.
The Index has remained above 50 since October 2013.