A new survey from the Iowa Business Council is projecting strong business growth for Iowa. The quarterly survey, which measures activity from Iowa’s largest employers to gauge the strength of their businesses, surged eight points higher from last quarter and 24 points higher than one year ago.
Here’s the release from the IBC:
Economic Outlook Indicators Project Strong Upward Movement
DES MOINES, IOWA – (June 1, 2010) Activity in the three areas measured by large employers to gauge the strength of business – sales, capital spending, and employment – is markedly higher for the coming six months. The 2010Q2 Iowa Business Council (IBC) Overall Economic Outlook Survey Index (OSI) rose to 62.3 – eight points higher than three months ago (54.3) and 24 points higher from one year ago (38.3). The survey was completed by the 20 corporate members of the Iowa Business Council during the second half of May, the results of which were released today.
The 2010Q2 Sales OSI is 67, nine points higher than last quarter and 23 points ahead of one year ago. Ninety percent of the CEOs expect steady or increased business activity over the next six months – substantially higher (10%), higher (55%), or no change (25%). Ten percent of survey respondents expect sales levels to decrease – lower (10%) or substantially lower (0%).
The 2010Q2 Capital Spending OSI is 60, which is five points above last quarter and 27 points higher than the 2009Q2 survey. Ninety-five percent of IBC corporate members expect steady or increased capital spending levels through November 2010 – substantially higher (10%), higher (25%), or no change (60%). Five percent of survey respondents expect capital spending, i.e., investments in facilities and equipment, to decrease – lower (5%) or substantially lower (0%).
The 2010Q2 Employment OSI is 60, ten points higher than three months ago and 22 points ahead of this same time last year. Eighty-five percent expect hiring levels for the next six months to remain steady or grow – substantially higher (0%), higher (50%), or no change (35%). Fifteen percent expect employment needs to decrease – lower (15%) or substantially lower (0%).
“These survey results provide evidence of a growing confidence by business leaders in the long-term prospects for the markets they serve,” said Tom Aller, president of Interstate Power & Light – an Alliant Energy company – and 2010 chair of the Iowa Business Council. “The depth and extent of the recovery continues to hinge on whether business reforms coming out of Washington, D.C., will have a limiting affect on our economy. The growing magnitude of budget issues in Europe may have an impact, as well. However, the IBC Economic Outlook sales index indicator has moved noticeably higher after bottoming back in 2009Q1. This suggests companies of all sizes in Iowa are beginning to adjust production levels and inventories in anticipation of increased business activity. The Iowa economy often is quite resilient in the face of challenging times, and these improved survey numbers are proof of that.”
The quarterly Iowa Business Council Economic Outlook Survey incorporates a diffusion index, wherein each survey response falls on a 100-point scale. Using weighted averages, an index number is then calculated that measures the sentiment of IBC executives projecting business activity six months into the future. An Outlook Survey Index (OSI) of 50 indicates that the business sentiment of all survey participants is average; an OSI above 50, the sentiment is positive; below 50, the sentiment is negative. This index will generate a numeric measure going forward that attempts to more precisely estimate the economic condition of business activity in Iowa.