Mass. employers are feeling optimistic about the economy heading into 2024

Massachusetts employers closed out 2023 feeling optimistic about the economy and the future of their businesses in 2024, according to the latest Business Confidence Index released Monday by Associated Industries of Massachusetts.

The index rose to 52.6 on a 100-point scale in December — a 1.6 point increase compared to November. The 50-point mark separates optimism from pessimism.

The latest index was down slightly compared to December 2022, but it was the highest it's been in 9 months. For much of 2023, employers felt more pessimism and uncertainty than the latest confidence index signals.

The boost in business confidence comes as interest rates have leveled off, and the Federal Reserve has signaled it may cut rates this year.

That put employers in a "good mood" at the end of 2023 and feeling more confident the economy will "reach a soft landing," according to Christopher Geehern, AIM's executive vice president.

"The economy is in general returning to a more predictable pattern than what we saw post-pandemic," he said. "And predictability is what employers really are looking for. So, they're feeling pretty good about their companies' prospects."

AIM, the state's largest business association, asked employers how they feel about the first six months of 2024 — specifically the direction of their businesses, and the direction of the state and national economies. This so-called "future index" increased 2.6 points to 54 in December, compared to the previous month. It was also higher year over year.

"Obviously you never know how things are going to play out, but right now I think employers are in a pretty good place, certainly the first half of this year," Geehern said.

Geehern added that employers project they will be able to hire more people and expand their workforce.

Overall business confidence did vary a bit by region. Employers on the North Shore ended the year feeling optimistic about the economy with a confidence index of 52.1. Meanwhile, employer confidence in western Massachusetts fell 2.9 points into pessimistic territory at 48.9. And employers in central Massachusetts ended the year with an index of 50, a neutral economic outlook.

The Business Confidence Index for December was based on a survey of 146 companies in the state, according to Geehern.