Companies are planning to add workers in the next six months but still worry about where those workers will come from, according to the Iowa Business Council’s economic outlook for the second quarter.

The survey, released today, showed increased economic optimism for the next six months and an improved outlook for each of the metrics measured by the survey.

The survey of Iowa Business Council members gauges the economic outlook in sales, capital spending and employment. A score of 50 or higher indicates positive sentiment.

The overall index for the second quarter increased 4.45 points to 64.17. The sales expectation index increased 3.47 points to 68.75, the index for capital spending grew by 4.31 to 61.25, and the employment expectation index increased by 5.56 to 62.50.

Joe Murphy, president of the Iowa Business Council, said the increased optimism is a signal that Iowa’s economy continues to be robust.

“And the continued resilience that we’re experiencing not only from our membership but from businesses across the state,” he said. “Every one of our members has a relationship with other small and midsized businesses in our state. I think it really paints a really positive picture for the state where we sit today despite a national narrative of impending economic concern on the horizon. Iowa once again is weathering this better than many other states.”

Some economists are forecasting an economic downturn and recession in late 2023 or early 2024.

Murphy said the survey results show that Iowa Business Council members, which include leaders from 21 of the state’s largest employers, are planning to add jobs over the next six months but remain concerned about where people to fill those positions will be found.

According to the survey, 80% of IBC executives surveyed reported that it remained somewhat to very difficult to find workers, down from 94% from the first quarter of 2023.

“The expectation is they want to expand their workforce, which is a good thing for Iowa’s economy when companies are looking to hire and make capital investments or workforce, labor investments in their company. But the problem will be, where are we going to get them?” Murphy said. “Are they going to be brand-new to the state? Are we going to recruit from another organization?”

Murphy also pointed to the increase in the capital spending metric as an indicator of the strength of Iowa’s economy.

“I think the fact that [the] capital spending [index] increase was that large is a very good indicator of the positive momentum that our economy is currently enjoying,” he said. “That means companies are reinvesting in their long-term plans to make sure that their businesses are in a very good position to continue to make money, continue to hire people and to continue to impact Iowa’s overall economy.”

Those responding to the survey also cited concerns with the ongoing stress on supply chains and its effect on the state’s business climate.

The data for the survey was collected in June before the Federal Reserve announced a pause in interest rate hikes as it continued efforts to lower inflation, which fell to 4.1% in May.

Murphy said he believes some of the increased optimism seen in the latest report was the result of lower inflation and the pause in interest rate hikes.

“They [the Federal Reserve] had been telegraphing for weeks that they were going to put a pause on this,” he said. “Inflation is still an issue, but we’re a lot better off from an inflation standpoint than we were 12 months ago, and I think the results of what the Fed ultimately did were baked into our results here.”