The quarterly survey of the leaders of the state’s largest businesses shows a brighter outlook for the next six months. Iowa Business Council executive director, Elliott Smith says the three indicators from the survey were better than the last quarter.
“Sales moved up slightly from the third quarter, capital spending remained steady, and employment dropped just slightly,” Smith says. “So, given the fact that our third quarter results in our last survey saw a fairly significant drop — we’re glad to see this fourth-quarter survey stabilize the numbers and actually give a little hope for the first portion of 2016.”
The survey uses an index of 100 points, with anything over 50 points being positive. The sales index was 62, five points higher than the third quarter. “When sales go up and remain that way for two or three quarters that’s generally a leading indicator and gives us some optimism that the business climate as a whole is improving. So, all-in-all we are pleased that this fourth quarter report showed a stabilization of sorts,” according to Smith.
The capital spending index stayed at 59, while the projected employment index dropped 3 points from the last survey to 58. Smith says they are a few things to keep an eye business leaders appear .
“I think generally here domestically everyone’s sort of keeping an eye on what the Federal Reserve is going to do. And some of the business regulatory matters up before Congress and coming out of the White House — that’s always a concern,” Smith says. “Hopefully for the most part we know what is coming at us, can plan for it, can schedule to it and produce business plans for it and make 2016 hopefully as robust if not more than 2015 has been.”
The farm economy has taken some hits with lower commodity prices, and Smith says that does have some impact throughout the state. He says you can see some impact on the Iowa economy, but the state has been fending off the ag problems in the last year or two as other business segments remained strong and made up for the downturn. Smith says they will be watching to see if that continues.
“It’ll be interesting to see in this coming year…commodity prices hopefully will adjust a little bit higher and give these ag companies a little hope for a more vibrant sales market than what they’ve seen for most of 2015,” Smith says.
Iowa’s unemployment rate is down to the level that is considered full employment. Smith says he looks a little more to the labor participation rate to get a handle on whether there are enough workers available for businesses.
“On the national level its at historical lows and here in Iowa we have some challenges remaining too,” Smith says. “And that gets to folks having the skill sets needed by employers and what they’re looking for. And we’re focused on working with state agencies and policy makers to try and provide opportunities for those seeking employment and willing to develop the desired and needed skills sets to obtain those.”
The Iowa Business Council (IBC) includes the top executives of the largest businesses in the state, the three Regent university presidents, and the Iowa Banking Association.