Mass. employers are less optimistic about the economy

Employers in Massachusetts are feeling a little less optimistic about the economy, according to the latest Business Confidence Index from the Associated Industries of Massachusetts (AIM).

The state's largest business association asks employers how they're feeling about the economy each month. The index was 51.5 on a 100-point scale in March — a two-point drop from the previous month (and a 5.7-point drop from the same time last year).

That decline is due to a lot of uncertainty in the economy, according to Christopher Geehern, AIM executive vice president.

"It's really kind of a weird economy," Geehern said. "Employers are wrestling with the same things that many individuals are wrestling with: That is inflation, rising interest rates, what's going to be the effect of banking disruptions. And at the same time, the job market continues to be relatively strong."

All of those factors — jobs, inflation, interest rates, banking — are making the state's employers more cautious about the future. Part of the concern for employers stems from the potential impact of the Federal Reserve tinkering with interest rates, according to Geehern.

"The big question is whether the Federal Reserve brings the economy in for a soft landing and a hard landing," Geehern said. "And what the numbers are showing is I think employers are increasingly persuaded that the landing is going to be a little bit harder than they had hoped."

On the jobs side of things, Geehern said employers have to do more to recruit a diverse workforce and train up potential workers to fill in labor gaps.

"It really is much more on the shoulders of the employer to go out and find workers rather than put up a 'Help Wanted' sign and wait for people to walk in the door," Geehern said.

"Employers are wrestling with the same things that many individuals are wrestling with: That is inflation, rising interest rates, what's going to be the effect of banking disruptions."

AIM Executive Vice President Christopher Geehern

AIM also looked to capture business confidence in a few specific regions of the state. Employers in the North Shore and Worcester were more optimistic than employers statewide — with an index of 54.9 and 52.1 respectively. AIM also examined Springfield for the first time, which was more neutral with an index of 50.

The March Business Confidence Index was based on a survey of more than 140 employers in Massachusetts.