A rise in interest rates, coupled with a slowdown of small business loans has pushed Massachusetts employer confidence from positive to neutral in April. According to the Associated Industries of Massachusetts Business Confidence Index, the month saw the lowest level of optimism since December 2020.
The monthly survey gathers information from over 140 Massachusetts employers. Last month, business confidence fell 1.4 points and reached 50.1, putting it in neutral territory. The level of confidence has dipped closer to the pessimistic zone, which is lower than 50. The confidence level in April is eight points less than it was a year earlier.
Nada Sanders is a professor of supply-chain management at Northeastern University. She said, "The neutrality position doesn't surprise me at any time."
Sanders stated that employers are experiencing signs of a slowdown in business due to the high interest rates set by the Federal Reserve.
Sanders added that the uncertainty in financial markets is "really significant" when it comes business confidence.
In the last two months, Silicon Valley Bank and Signature Bank have both failed. First Republic Bank is also one of them. Sanders stated that the failure of these banks 'points to the uncertainty' employers feel.
Despite a decline in business confidence, the U.S. Index rose 1.4 points, to 42.4. However, it remained in the pessimistic zone for a seventh straight month. The future index (which measures projections of the economy six-months from now) lost 1.2 points, placing it in pessimistic terrain at 48.8.
Businesses report that customers are delaying purchases as they assess whether the economy will experience a soft landing, or a recession. The report released on Friday, which showed that US employers had created 253,000 new jobs in April, shows that the job market continues to defy any slowdown.