Press Release: 6/9/2025

Business Confidence Rebounds; Outlook Remains Pessimistic

 

Posted on June 7, 2025

Confidence among Massachusetts employers rebounded last month but remained in pessimistic territory amid continued economic and policy uncertainty.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 6.3 points during May to end the month at 47.8. The reading broke a three-month slide and left the Index 5.5 points lower than in May 2024.

A reading less than 50 on the 100-point Index indicates a pessimistic outlook.

The rebound mirrored a similar recovery of US consumer confidence from an almost five-year low as perceptions of the economy and labor market improved. The government also reported on Friday that US employers created a better-than-expected 139,000 jobs during May.

“Employers and consumers alike appear to have settled into a wait-and-see period as the administration conducts trade negotiations with individual nations,” said Sara Johnson, Chair of the AIM Board of Economic Advisors (BEA), which oversees the BCI.

Tariffs remain front-of-mind for participants in the confidence survey.

“While sales remain at steady levels, I’m not sure how long this will last. Along with the known tariffs is the destabilization of the government as a whole,” wrote one executive from a manufacturing company.

“I’m also worried about our people and how we can continue to support them financially. With sales being uncertain we may not be able to provide raises or bonuses as we have in the past. Our insurance costs will also increase, especially healthcare, so our people will have that increased cost to bear.”

The AIM Index, based on a survey of more than 140 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, 1997-98, and its all-time low of 33.3 in February 2009.

Constituent Indicators

Almost all the constituent indicators that make up the Index gained ground during May, but with one exception, they all still registered a pessimistic reading.

The confidence employers maintain in their own operations increased 4.2 points to 50.8. That figure was 4.0 points weaker than in May 2024.

The Massachusetts Index, assessing business conditions within the commonwealth, gained 7.1 points to 45.0, leaving it 8.8 points lower than a year earlier. The US Index measuring conditions throughout the country rose 11.8 points to 41.4, down 6.7 points from a year ago.

The Current Index, which assesses overall business conditions at the time of the survey, increased 4.4 points to 48.1. The Future Index predicting conditions six months from now was up 8.2 points.

The Manufacturing Index gained 4.6 points but remained 1.7 points lower than in May 2024. The Employment Index was the only element to decline during May, losing 0.4 points to end the month at 47.4. This follows an increase in the state unemployment rate to 4.6 percent in April from 4.4 percent in March.

Large companies (50.8) were more optimistic than medium-sized companies (49.1) or small companies (42.4).

“Uncertainty is the enemy of confidence,” noted Michael D. Goodman, Professor of Public Policy at UMass Dartmouth and a BEA member. “Federal actions that threaten Medicaid funding, reduce support for R&D, and discourage immigration are weighing heavily on the Commonwealth’s economic and fiscal outlook,” Goodman added.

The uncertainty surrounding federal grant freezes is especially concerning because Boston’s economy has the highest share of science-related industries among the nation’s 20 largest metro areas.

Seeking Certainty

AIM President and CEO Brooke Thomson said Governor Maura Healey’s recent move to eliminate a series of regulations for the purpose of saving businesses and business owners time and money will be a big help to economic development.

“The administration is identifying ways to make it easier to do business in Massachusetts and enhance the state’s economic competitiveness. This is a critical step forward for Massachusetts,” Thomson said.