A Sun Staff Report
BOSTON -- Business confidence showed further strength in the Bay State last month, according to a monthly survey of conditions tallied by the Associated Industries of Massachusetts.
AIM's Business Confidence Index added 2.5 points to post a reading of 56.2 for July. Last month marked the highest reading since April 2012.
"We have seen rising business confidence and, not coincidentally, more robust job creation," said Raymond G. Torto, chairman of AIM's Board of Economic Advisors and a lecturer at the Harvard Graduate School of Design.
The state reported last month that 48,900 jobs had been created in Massachusetts for year ending June 30, sending the state's unemployment rate down to 5.5 percent. That's the lowest it's been since August 2008.
Also, MassBenchmarks recently reported that economic growth in the state was a solid 4.9 percent.
"Since its stumble in the first quarter, the economy has rebounded well, and employment has been trending up," said BEA member Michael Tyler, chief investment officer at Eastern Bank Wealth Management. "It is gratifying to see more people returning to the workforce and finding jobs. If this trend continues to gain momentum, the Federal Reserve will need to rein in overly optimistic expectations by raising interest rates sometime next year."
AIM's Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors.
Torto said the biggest year-to-year gainers among the survey's sub-indices "are those tracking general business conditions in the state and nation, which appears to reflect a growing sense among employers that they are operating in something like a 'normal' economy."
AIM reported that all but one of the sub-indices based on selected questions or respondent characteristics were up from June to July.
For example, the Company Index, which measures survey respondents' overall confidence in the situations of their own operations, rose 1.5 points in July to 58.0. The Employment Index added 1.4 points to 56.0, and the Sales Index edged up three-tenths to 57.9. Each was up between two and three points on the year.
"Many Massachusetts employers added staff in the first half of the year, with additions outweighing reductions by almost three to one (34 percent vs. 12 percent), and expectations for the next six months are similar," said BEA member Sara Johnson, senior research director of Global Economics at IHS Global Insight. "Greater confidence in the stability of the economy is at last making employers more willing to hire."
The monthly Business Confidence Index is based on a survey of AIM member-companies across Massachusetts, asking questions about current and prospective business conditions in the state and nation, as well as for respondents' own operations.