Business confidence slips in September

Confidence among Massachusetts employers dropped in September after three months of growth, reflecting increased concerns about inflation and financial strain on the horizon.

The Associated Industries of Massachusetts reported Tuesday that its business confidence index ticked downward to 53.9, the lowest level since June. The 100-point index shed 1.4 points from August and sits 5 points lower than September 2021, though it remained in what AIM considers "positive" territory.

Leaders of the business group said employers continue to grapple with hiring challenges and the pressure imposed by blistering inflation. The Federal Reserve hiked interest rates three-quarters of a percentage point in September, which was also the worst month for financial markets since March 2020, when COVID-19 upended public life, according to AIM.

"Companies remain concerned about inflation, the cost of borrowing and the potential for a recession, but their primary concern remains finding the employees they need to enable growth and maintain operations," said AIM Board of Economic Advisors Chair Sara Johnson. "Many businesses have been able to increase product prices to compensate for rising costs and have thus sustained or increased their payrolls."

AIM pointed to two survey responses as reflecting the "push and pull" of economic factors: one participant saw "moderate to extreme growth" among its clients in semiconductor equipment manufacturing, lab equipment manufacturing, construction, law, insurance, HVAC equipment installation, and clean tech, while another lamented that "borrowing costs are near double what they were in 2021."

Another business survey published Tuesday reflected similar worries stretching across the United States.

While the National Federation of Independent Businesses Small Business Optimism Index rose 0.3 points in September, the survey found 30% of owners feel inflation is the single-largest problem they face operating a business, and 46% reported job openings that were hard to fill.

Massachusetts legislative leaders approved more than $4 billion this summer in economic development and tax relief to support both employers and employees — including money for the state's unemployment insurance trust fund — but since then they have been unable to agree on a final plan alongside nearly $3 billion in required refunds to taxpayers.