A survey of the states’s largest businesses shows and increase in the index that measures capital spending, but expect sales and hiring to drop. Iowa Business Council Index executive director, Elliott Smith, says the capitol spending index was up one point.
“That means that employers are looking to maybe spend a little bit more on buildings and equipment, sort of the infrastructure of the business,” Smith says. “So that always bodes some optimism for what’s coming and that they expect business activity to be solid enough to justify building and investing in those sorts of things.”
The index that measures potential hiring was six points lower than the survey three months ago, while the sale index dropped three.
“Our employment number always seems to be sort of the lagging indicator. We need a few solid quarters of sales and capital spending — particularly sales — and then we usually see the employment number follow,” according to Smith.
“So, the fact that we did see sales tick down here a little bit the employment movement as well.” The index uses a 100-point scale and the overall index that factors in sales, capital spending and employment was at 61 — three points lower than the last quarter and the same as this time last year.
Any index number that is above 50 is considered positive. Smith says there is still a lot of caution among businesses and that is likely why the numbers haven’t move forward.
“We hope it’s an aberration and not a trend,” Smith says. He says there have been some issues on the national level and then the international issues that have had an impact on the business outlook in the next six months.
“Hopefully next quarter we do see a resumption of more positive numbers here on the employment front.” Smith goes back to the increase in plans for capital spending as a good indicator that businesses are optimistic overall.
“We’re approaching the holiday season and in some instances in these Iowa companies that does impact business activity and sales. So we’re hopeful that again, that this is just a small cautious setback and that 2014 will bode well for business on all levels here,”Smith says.
A closer look at the numbers shows 89-percent of the CEO’s expect steady or increased sales over the next six months – substantially higher 11-percent, higher 53-percent and no change, 26-percent. Seventy-four percent expect hiring levels for the next six months to remain steady or grow.
None of the business leaders expect hiring to be substantially higher, 32-percent said higher and 42-percent said no change. Twenty-six percent expect employment needs to decrease.
See the full report here: www.iowabusinesscouncil.org