Iowa business leaders remain optimistic about the state’s economic outlook heading into the second quarter of 2026, according to the latest quarterly survey from the Iowa Business Council.

The organization’s first-quarter Economic Outlook Survey index rose to 65.35, up from 63.16 in the fourth quarter of 2025 and above the 50-point threshold that signals positive sentiment. The latest reading is also more than four points higher than the survey’s historical average.

The outlook was driven largely by a surge in sales expectations, which climbed nearly eight points to 73.68, the highest level recorded since 2018.

“That’s the highest it’s been in eight years,” said Joe Murphy, president of the Iowa Business Council. “And I think that indicates the fact that Iowa companies are expecting their customers, their clients, to have a really dramatic uptick in the demand for their products over the next six months.”

The quarterly survey, conducted among the IBC’s 22 members, measures expectations for sales, capital spending and employment over the next six months. Murphy said the results provide a good snapshot of Iowa’s economic outlook, noting that IBC members have partnerships and supply chain relationships with companies across the state.

Despite ongoing challenges in agriculture and some disruptions in manufacturing, Murphy said the overall results reflect continued resilience among Iowa businesses.

“Despite whatever challenges might be happening globally or within individual companies, we again expect good things to happen among Iowa’s business community,” he said.

Capital spending expectations rose slightly, increasing 1.31 points to 64.47. Employment expectations, however, declined by 2.64 points to 57.89, though they remained above the 50-point threshold.

Murphy attributed the dip in hiring expectations in part to the state’s ongoing workforce shortage.

“Companies aren’t hiring as much as they had in the past, and I think people aren’t moving on from job to job as much as they did in the past as well,” he said. 

Those concerns were reflected in the survey’s top reported business challenges. More than half of respondents, 53%, cited both the cost of products/service inputs and workforce attraction and retention as primary issues. Another 47% pointed to an unfavorable business climate, which includes the national supply chain, infrastructure and federal regulations. 

Murphy said global challenges are also factoring into business sentiment, though the long-term impact remains uncertain.

“This survey was taken after the war was launched in Iran, and so that global macroeconomic situation is reflected in these numbers. … The question right now that nobody knows the answer to is how much of an impact it will have,” he said.

Even so, Murphy said the strong start to 2026 could help sustain momentum, particularly if policymakers address key issues at the state and federal levels.

“I think setting the stage in this first quarter for 2026 with such a strong showing in our optimism is really important,” he said.