BOSTON — Business confidence among Massachusetts employers slumped last month amid lingering concerns over the COVID-19 pandemic and rising inflation.
That’s according to the latest Business Confidence Index from the pro-business group Associated Industries of Massachusetts, which shows overall enthusiasm among employers declined 0.8 points to 55.9 in January. That’s the lowest level since January 2021, the report’s authors noted.
The situation remains similar north of Boston, where the business confidence index for the region was gauged at 56.6 in January — slightly higher than the state.
Many employers struggled to maintain operations and expand businesses amid the spread of the highly contagious omicron variant, which drove up COVID-19 infections and hospitalizations last month, the report notes.
Meanwhile, a 40-year high for inflation, persistent labor shortages and lingering supply-chain issues have increased pessimism among many businesses.
“Employers face a multitude of uncertainties at the start of 2022, ranging from pandemic-induced absences among employees to rising prices for raw materials,” Sara L. Johnson, chair of AIM’s board of economic advisers, said in a statement. “Still, confidence remains in optimistic territory and manufacturers, in particular, are upbeat about their business prospects.”
The report’s authors note that the fundamentals of the state’s economy are strong, with Massachusetts’ economy growing by 8.2% during the fourth quarter of 2021.
The report, which draws upon surveys of about 140 businesses, also points out that the state’s business confidence index is “within optimistic territory” — about 3.5 points better than a year ago — and has been on the decline for several months.
State labor officials point out that Massachusetts has gained nearly 537,000 jobs since April 2020, when many non-essential businesses were shut down to prevent spread of the virus. They also point to the latest unemployment data shows that new claims for jobless benefits are receding.
The state’s unemployment rate fell to 3.9% in December, according to the Executive Office of Labor and Workforce Development. The labor force participation rate, or the number of people 16 years of age or older who worked or were unemployed and looking for work, dropped slightly to 65.4% in December, according to the agency.
But the state’s hiring crunch is lingering, according to another new report that finds more than half of all employers are struggling to fill vacancies.
The latest survey by the National Federation of Independent Businesses found that 47% of all employers could not hire enough staff in January, while more than 23% of available positions went unfilled — a 48-year high.
At least 93% of business owners hiring or trying to hire reported few or no qualified applicants, according to the report.
Christopher Carlozzi, NFIB’s Massachusetts state director, said while the state’s unemployment rate is dropping, small businesses are still struggling to fill vacancies.
“Despite employers raising compensation for their workers, the struggle to hire and find qualified employers is real and remains a top concern for Main Street businesses, he said.
Carlozzi called on Beacon Hill leaders to “ease restrictions and mandates that have acted as barriers to our state’s growth and economic recovery.”
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at [email protected]
