The Iowa Association of Business and Industry (ABI) finds continued uncertainty about factors impacting business as they survey members on their outlook for the fourth quarter.
ABI President, Mike Ralston, sums it up this way. “The bottom line with the survey is folks are continuing to see a strong business cycle. But boy, there’s a lot of concern about what lies ahead,” Ralston says. Ralston says finding employees continues to be a concern and has been for several years. He says one other item was more prominent in the latest survey.
“A lot of talk about supply chain issues and inflation and the impact that has on materials costs.” Ralston says. “Many, many more respondents mentioned those than is typical, so the business cycle was strong. But I’d say folks are pretty cautious and watching a couple of issues to see what happens.” He says businesses have been doing a lot of creative things to deal with supply chain problems.
“Certainly looking for new vendors and have had some luck in that regard. But we’ve even seen manufacturers who were sort of combining their efforts. By that, I mean, they’re, they’re placing a joint order. So if they need a certain product, they’ll be able to hire, they’ll be able to purchase at a greater quantity, which brings the price down some,” according to Ralston.
He says it doesn’t look like supply chain issues are going to go away anytime soon. “In fact, I was looking over some information that we had from some other sources about supply chain issues, and the first time we talked about it, I think in a big way, was 2019. And one of the economists said, well, it won’t happen soon, but it should be over by the end of 2020,” he says, “And here we are, you know, approaching the end of 2022. And it’s still there. And so I think our folks are going to expect that supply chain issues continue for a while yet.” ABI has 1,5oo member companies of all types and sizes in all 99 counties employing more than 330,000 workers.
Ralston says one thing stands out among all the concerns about supply chain issues, inflation, and finding workers.
“Despite all this talk about concern and caution — 60% of those who replied said that they expect to make capital expenditures in the fourth quarter of this year. I mean, that continues to amaze me.” Ralston says. “And, you know, business folks are pretty cautious. They wouldn’t do that if they didn’t think there was going to be a good business cycle ahead. So there’s some real hope and that number for sure.”
Thirty-seven percent of respondents expect sales to expand in the third quarter of the year. That’s a decrease from 48 percent in the third quarter and 60 percent for the second quarter of 2022. Eighteen percent expect sales to retract, a five percent increase from last quarter.