The optimism of Mass. Business faded in October

Image courtesy of AIM

With interest rate hikes piling up, Massachusetts employer confidence slipped to near-pessimistic levels last month.

The Associated Industries of Massachusetts monthly Business Confidence Index survey found that business confidence — already hovering near the lower bound of “optimistic” territory — fell 3 points on the group’s 100-point scale to 50.9 in October . If the index falls below 50, employers’ prospects have turned pessimistic, says AIM. It’s the second decline in as many months.

The reading is now 7.5 points below employer confidence a year ago and coincides with the recent 0.75 percent hike in the Federal Reserve’s benchmark interest rate, which pushed up funding costs for most businesses and stunted housing activity – and housing construction has slowed down areas of real estate development significantly.

The index hit its historic high of 68.5 twice in 1997 and 1998 and its all-time low of 33.3 in February 2009.

“Consumers continue to cautiously increase spending, but we are beginning to see that higher interest rates are negatively impacting housing markets and related purchases such as furniture and appliances. Rising interest rates are also impacting the technology sector through restrictions on the supply of venture capital and private investment financing,” said Sara L. Johnson, chair of AIM’s Economic Advisory Committee, in a statement released along with the survey results.

At a regional level, businesses in the Worcester area were the most pessimistic, with AIM’s Central Massachusetts Business Confidence Index falling to 47.8 from 53.3 last month.

John R. Regan, President and CEO of AIM, also a member of AIM’s Business Advisory Board, said workforce challenges are likely to plague businesses in the region, pointing to a summer survey by MassINC that indicated the population of the state’s working-age graduate population will decrease by 10 percent. or 192,000 people by 2030.

“Many AIM member companies don’t need a survey to tell them what they already know – that labor shortages and shortages of skilled talent, exacerbated by the impact of COVID-19, have dealt a severe blow to day-to-day operations. Our members across all industries are unable to fill positions with qualified candidates and the Commonwealth is losing workers to lower cost states,” Regan said in a statement.


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