Local business confidence moves slightly above neutral, AIM says

Graph provided by AIM.
Graph provided by AIM.Credit:

A monthly confidence index that seeks to gauge the mood of local employers posted a 50.1 reading in March, up 1.1 points from the February reading but down 4.7 points from the March 2012 reading, the Associated Industries of Massachusetts said Tuesday.

Known as AIM, the association of Bay State business and institutional employers uses a 100-point scale for its AIM Business Confidence Index. A reading above 50 suggests a positive outlook, a reading below 50 a negative view. A reading of 50 represents neutral.

In a statement, Raymond G. Torto, the chair of AIM’s board of economic advisors, commented on the index’s latest reading.

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“This reading, which is about as close to neutral as it could be, continues what has now been three years of fluctuations with no strong pattern,” Torto said. “The index is down over one and two years because we had early-year gains in 2011 and 2012, but over all, we are still in the range where we spent most of 2011 --- and almost exactly where we were two months ago.”

In Torto’s view, employers are being cautious as they seek to sort out the mixed messages that are coming from other economic indicators and the political debate in Washington, D.C.

A cause of particular concern: the so-called sequester issue. Sequester is the Washington word for automatic spending cuts that recently went into effect.

“We see stock market indices at or near all-time highs, real estate values coming back up, and the US unemployment rate edging down,” Torto said in his statement. “And here in Massachusetts, our local economy continues to perform relatively well. At the same time, there are new causes for concern --- the sequester, which many survey respondents expect will have negative effects; banking woes in Cyprus; proposed state tax increases. The recovery is moving forward, but it is still more of a healing process for the economy than a return to full vigor.”

AIM’s Business Confidence Index has been issued monthly since July 1991. Its historical high was 68.5, attained in 1997 and 1998. Its all-time low was 33.3 in February 2009.

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