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Massachusetts business confidence edged downward in Feb., AIM says

A monthly index that tracks confidence among local business leaders posted a reading of 49 in February, down 1.4 points from January’s reading, as executives fretted about the impact of “sequestration,” a name given to federal budget cuts now going into effect.

Those cuts have the potential to hurt the state’s economy.

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The Massachusetts Business Confidence Index is maintained by the Associated Industries of Massachusetts, an employer association of Bay State businesses and institutions. The index uses a 100-point scale. A reading above 50 indicates a positive mood in the Bay State’s business community, while below 50 suggests a negative outlook.

“We saw a marginal uptick in the assessment of national conditions coming off of January’s federal tax agreement, but otherwise the numbers were down a little across the board,” Raymond G. Torto, chair of AIM’s Board of Economic Advisors, said in a statement. “Massachusetts employers face growing uncertainties locally, nationally and globally, leaving the Index down 5.9 from its reading last February.”

Referring to sequestration, Torto added: “Government programs and employment at all levels will take a hit, but our state has disproportionate exposure in the private sector,” he said. “Defense contractors are already feeling spending reductions, and higher education and health care are bracing for cuts – these are very important components of our state’s economy. Meanwhile, key export markets in Europe are in or on the edge of recession. Everyone is aware of the Commonwealth’s own fiscal challenges, and of the governor’s very ambitious budget and tax proposals. Although these are by no means ‘doom and gloom’ survey results, they reflect a very unsettled situation for businesses.”

AIM’s Massachusetts Business Confidence Index debuted in 1991. It reached its historic high of 68.5 on two occasions, once in 1997, and again in 1998. Its all-time low of 33.3 was recorded in February 2009.

Chris Reidy can be reached at
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