Central Mass. business confidence slides in March amid inflation, labor cost concerns
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Workers build office furniture at Leominster manufacturer AIS.
The Central Massachusetts Business Confidence Index fell slightly in March, as business owners expressed concern over the rising cost of labor and inflation.
The index declined 0.5 points from 52.4 in February to 51.9 in March, according to figures from the Associated Industries of Massachusetts released Monday. Scored on a 100-point scale, an index number above 50 represents an optimistic outlook, while a number below 50 represents a pessimistic outlook.
Statewide business confidence declined, too, as the Massachusetts Business Confidence Index lost 2.3 points, falling to 52.2.
Businesses participating in the survey used to compile the index cited rising labor costs, inflation, high healthcare costs, and high interest rates as impediments to growth.
“Stable but still problematic. Inflation on labor has significantly escalated the cost of doing business when it comes to private development,” wrote one company in its survey response.
AIM’s Board of Economic Advisors is hopeful planned interest rate cuts will help boost the state’s economy.
“The Fed has signaled that it expects to reduce its key interest rate three times during 2024 despite stronger-than-expected price increases during January and February. Financial markets have already priced in the three rate cuts, which should help the economy as we move through the year,” Sara Johnson, chair of the AIM Board of Economic Advisors, said in the press release.
Manufacturing firms saw a large decline in business confidence, as AIM’s statewide Manufacturing Index fell into pessimistic territory, declining 5.4 points to 45.4.
Global supply chain issues, made more complicated by world events including a drought impacting Panama Canal operations and the collapse of a key bridge at the Port of Baltimore, remain on businesses’ minds.
“Baltimore is a primary processing point for imported autos and small trucks, but other East Coast ports should be able to help in the short run, at least until the bridge wreckage is cleared. However, if this situation drags on, it will create economic impacts both on the East Coast and domestically, ” Nada Sanders, professor of supply chain management at Northeastern University in Boston, said in the release.
Elsewhere in the state, the Western Massachusetts Business Confidence Index fell 4.9 points to 50.5 and the North Shore Confidence Index rose 6 points to 56.
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