New survey shows drop in business expectations
By Charlotte Eby Journal Des Moines Bureau | Posted: Tuesday, December 02, 2008
DES MOINES -- Executives of Iowa's largest employers are predicting lower capital spending and lower employment levels in the coming months, according to a new survey.
The survey released by the Iowa Business Council, a non-profit organization with executives from Iowa's 19 largest employers, showed declines in two out of three economic indicators.
"People are just not being quite as open with their pocketbooks, and it's I think impacting just about every aspect of the economy here," said Elliott Smith, the council's executive director.
The survey was released the same day officials confirmed the U.S. has been locked in a recession since December 2007.
In Iowa, the council's Overall Economic Outlook Survey Index (OSI) dipped to 43.3, down 20 points from the September survey.
Respondents had a negative outlook for employment levels, with 42 percent expecting them to stay the same, 37 percent expecting them to be lower and 11 percent expecting them to be substantially lower. Just 11 percent expected employment to be higher in the coming months.
Expectations for sales stayed on the positive side of the index but dipped from the previous quarter and last year.
A total of 37 percent of Iowa business leaders said they expected to see lower capital spending, and another 16 percent said they expected levels to be substantially lower. Another 26 percent saw no change in capital spending, while 22 percent saw higher or substantially higher levels.
Smith said this survey marked the first time Iowa business leaders began to catch up the rest of the country's outlook. The survey was completed during the second and third weeks of November.
"Certainly, it's less positive than our previous surveys. We've been running with a positive business sentiment for over a year here in the face of other surveys, national surveys, that would indicate lower expectations for business," Smith said.
Iowa business leaders hope the downturn has reached a bottom and that 2009 will see more positive results, at least in the second half, Smith said.
"Recessionary trends are coming to roost here in Iowa and hopefully they're short-lived," Smith said.
Smith said the lower employment expectations likely mean firms won't replace departing employees as quickly or create new positions quickly.
"They're going to just try to maintain as best they can with what they have. Hopefully, that means no layoffs," Smith said.
The survey did not specifically address whether employers expected to lay workers off.
Mike Ralston, president of the Iowa Association of Business and Industry, said some larger employers are having a much slower year.
But another tier of Iowa employers, particularly mid-level manufacturers, are having very strong years and can find workers with the qualifications they need, he said.
"It might be tough for them to compete with a Rockwell Collins or a Deere and Co., but when those folks aren't out there in the marketplace, these folks are able to hire," Ralston said.
Some ABI members, many of whom are manufacturers, believe the economy has reached bottom and the second half of 2009 will bring an upturn, he said.
"There are certainly a number of folks who are more pessimistic than that," Ralston said.
Charlotte Eby can be reached at 515-422-9061 or chareby@aol.com.
The survey released by the Iowa Business Council, a non-profit organization with executives from Iowa's 19 largest employers, showed declines in two out of three economic indicators.
"People are just not being quite as open with their pocketbooks, and it's I think impacting just about every aspect of the economy here," said Elliott Smith, the council's executive director.
The survey was released the same day officials confirmed the U.S. has been locked in a recession since December 2007.
In Iowa, the council's Overall Economic Outlook Survey Index (OSI) dipped to 43.3, down 20 points from the September survey.
Respondents had a negative outlook for employment levels, with 42 percent expecting them to stay the same, 37 percent expecting them to be lower and 11 percent expecting them to be substantially lower. Just 11 percent expected employment to be higher in the coming months.
Expectations for sales stayed on the positive side of the index but dipped from the previous quarter and last year.
A total of 37 percent of Iowa business leaders said they expected to see lower capital spending, and another 16 percent said they expected levels to be substantially lower. Another 26 percent saw no change in capital spending, while 22 percent saw higher or substantially higher levels.
Smith said this survey marked the first time Iowa business leaders began to catch up the rest of the country's outlook. The survey was completed during the second and third weeks of November.
"Certainly, it's less positive than our previous surveys. We've been running with a positive business sentiment for over a year here in the face of other surveys, national surveys, that would indicate lower expectations for business," Smith said.
Iowa business leaders hope the downturn has reached a bottom and that 2009 will see more positive results, at least in the second half, Smith said.
"Recessionary trends are coming to roost here in Iowa and hopefully they're short-lived," Smith said.
Smith said the lower employment expectations likely mean firms won't replace departing employees as quickly or create new positions quickly.
"They're going to just try to maintain as best they can with what they have. Hopefully, that means no layoffs," Smith said.
The survey did not specifically address whether employers expected to lay workers off.
Mike Ralston, president of the Iowa Association of Business and Industry, said some larger employers are having a much slower year.
But another tier of Iowa employers, particularly mid-level manufacturers, are having very strong years and can find workers with the qualifications they need, he said.
"It might be tough for them to compete with a Rockwell Collins or a Deere and Co., but when those folks aren't out there in the marketplace, these folks are able to hire," Ralston said.
Some ABI members, many of whom are manufacturers, believe the economy has reached bottom and the second half of 2009 will bring an upturn, he said.
"There are certainly a number of folks who are more pessimistic than that," Ralston said.
Charlotte Eby can be reached at 515-422-9061 or chareby@aol.com.
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