Massachusetts business confidence rose modestly in September after a sharp decline in August, though employers remained pessimistic overall amid higher interest rates, inflation and rising operating costs.
The Associated Industries of Massachusetts Business Confidence Index increased 1.2 points to 48.6 in September, up from 47.4 in August. The reading was 1.1 points higher than in September 2025 but remained below the neutral 50-point threshold separating optimism from pessimism.
The monthly index is based on a survey of more than 140 Massachusetts employers and has been published by AIM since 1991. It measures employer views on current and prospective economic conditions in Massachusetts and the U.S., along with conditions at their own companies. AIM released the results of its September survey on Monday.
The AIM index is based on a survey of more than 140 Massachusetts employers and is scored on a 100-point scale; a score of above 50 represents an optimistic outlook, and a score below 50 represents a pessimistic outlook.
Brooke Thomson, AIM’s president and CEO, said consumer spending, technology infrastructure investment and a strong labor market have supported growth in Massachusetts and nationally. The central near-term concern is how far the Federal Reserve may raise interest rates to address inflation running above its 2% target.
Employer sentiment reflected mixed economic conditions, with moderate growth offset by pressure from persistent inflation, interest rates, and other costs affecting profitability, according to AIM.
“The unusual feature of the current environment is that growth has held up better than many expected even as the Federal Reserve has been dealing with renewed inflation pressure,” Sara Johnson, chair of AIM’s Board of Economic Advisors, said in the announcement of the latest AIM results. “The survey is providing a vivid picture of some companies doing very well and expanding while others are struggling with rising costs for energy and other critical inputs.”
One employer cited diesel fuel prices above $6 per gallon as a drag on profitability and household budgets. An architecture firm reported hesitancy and cancellations among clients, attributing the slowdown in part to rising construction costs tied to tariffs on materials and equipment.
Several component measures improved during September. The Company Index, which measures confidence in respondents’ own operations, rose 2.9 points to 53.3, while the Current Index, measuring present business conditions, increased 2.7 points to 51.3.
The Employment Index rose 3.6 points to 52.5, and the manufacturing index gained 1.7 points to 50.7.
Confidence in the broader state and national economies fell, however. The Massachusetts Index declined 1.7 points to 44.7, though it remained two points above its September 2025 level. The U.S. Index dropped 0.8 points to 38.6, 0.9 points below a year earlier.
The Future Index, which measures expectations for the next six months, slipped 0.2 points to 45.9, indicating employers expect challenging conditions to persist.
Large companies registered the strongest confidence reading at 50.6, compared with 47.2 for small companies and 46.9 for medium-sized businesses.
Eric Casey is the managing editor at Worcester Business Journal, and primarily covers the real estate and banking & finance industries.
