Economic Outlook Jumps Into Positive Territory in Iowa Business Council’s Q3 Survey
October 8, 2020
Optimism among Iowa businesses grew in the third quarter of 2020, as expectations for increased employment, capital investment and sales rose, according to the Iowa Business Council’s Economic Outlook Survey released today.
Despite the positive sentiment, there were still some concerns over employment, according to the survey, which projects the state’s business climate over the next six months.
It was the first time in 2020 the index measured above 50, rising to 58.17 in the third quarter, a 17.46-point increase from the second quarter.
“We’re excited and optimistic about the future here in Iowa,” said Joe Murphy, executive director of the Business Council, ahead of the release of today’s report.
Despite the optimism, Murphy said business leaders understand the challenges that remain as a result of the coronavirus pandemic.
“Obviously we’re not out of the woods yet, with respect to the pandemic and the recession. But that being said, I think there’s a lot to go off and a lot of room for future growth and potential within our economy,” Murphy said.
He said the key takeaway from the report is that business leaders are beginning to plan more long-term for the first time in several months.
“The sentiment would not be positive if they were not able to do that,” Murphy said. “If you look through the statistics we have, they are optimistic in all three areas, whether it’s sales, capital spending and employment. That gives us a sense of what their process is, and I think that breeds a level of optimism we have not seen since the latter part of 2019.”
He said 55% of survey respondents expect sales to increase, while 45% are expecting to increase capital spending. Forty-one percent of respondents expect employment to be higher.
“That's a good sign, which also reflects that they are beginning to rehire as much as they can,” he said.
On the flip side, about the same number of companies indicated they expect no change in employment.
“That reflects a little bit of the uncertainty from the pandemic, but when you think about the challenges impacting business climate assessment right now, it is still that workforce issue,” Murphy said. “How do we recruit, train and retain a talented workforce? And then, of course, challenges of the pandemic. When does it end? What does the next phase look like? How do we get through the fall and winter months in Iowa? Those sort of things are hanging over us, and that’s something to not discount.”
Mary Andringa, Business Council chair and chair of Vermeer Corp., said while significant challenges from the pandemic remain, the survey shows council members are optimistic about the future.
"As we enter the fourth quarter, we remain hopeful this trend line continues and that businesses in Iowa continue to recover and grow,” she said in the report.
The survey was conducted in the last half of September. Murphy said all 22 of the Iowa Business Council’s members responded.
The Iowa Business Council is a nonprofit organization made up of chief decision-makers of the state’s largest employers. The organization works to boost the state’s economy through leadership, research and advocacy, according to its website.
While the survey looks six months ahead, Murphy said the optimism reflected in the report indicates a longer-term positive view of the state’s economy.
“I think there’s some great opportunities as we go into 2021 for Iowa to emerge from this recession and this pandemic better than we were on March 1, 2020,” he said.
That could be rolled into policy initiatives on opportunities, such as housing and broadband connectivity, Murphy said.
“I think there’s some great potential for significant investment in our state, and that will really usher in a new generation of ingenuity and innovation, something we've all talked about for a long time, but it takes a lot of money,” he said. “And the fact that we’re all able to get on the same page on that and hopefully identify specific areas where we can utilize funds is important to long-term success.”
Read the full Business Record article here.