Iowa employers remain concerned about their ability to fill positions, an issue that leaders of the Iowa Business Council say they hope to make progress on during the current legislative session, which began Monday.

The Iowa Business Council released its fourth-quarter economic outlook today, projecting a positive economic outlook for the first six months of 2024.

The report contains an overall score gauging optimism for the next six months and scores representing expectations for sales, capital spending and employment. A score greater than 50 indicates positive sentiment.

The quarter four report showed that the overall index score declined slightly, down 0.27 points to 59.65, the eighth straight month it has remained in positive territory, which Joe Murphy, president of the Iowa Business Council, said is an indication of Iowa’s thriving economy.

The index score for capital spending increased 6.40 points to 67.11, indicating companies are planning investments to grow in 2024. Expectations for sales and employment both declined in the fourth quarter — the sales index fell 4.01 points to 57.89, while employment decreased 3.19 points to 53.95, both representing positive sentiment for the first half of 2024.

According to the report, 74% of those responding to the survey said workforce attraction and retention was their primary business challenge. Of those, 85% said it was somewhat to very difficult to find employees. That is down from 90% in the third quarter of 2023.

Murphy said concerns over employment are based on the strength of the state’s economy and the challenges companies are having finding employees as they make plans to expand.

“It’s great to be in a position to say businesses are thriving in this state, and when businesses are looking to expand, the default position is going to be around hiring more people,” he said. “We still want to hire more people, but the resources to do that in the sheer number of people to do that are just not there.”

Iowa’s labor participation rate has returned to pre-pandemic levels, and its unemployment rate remains very low, a combination that makes finding available workers a perpetual challenge unless more is done to increase the state’s workforce, Murphy said.

“Workforce continues to be the No. 1 topic and area companies are look for help from policymakers, so looking at things like work-based learning and upskilling individuals are going to be those areas that the Legislature should rightly focus on to continue to grow and enhance our home-based and homegrown talent,” he said.

Overall, Murphy said Iowa companies are watching the economy and the regulatory environment nationally as they take stock of where things stand.

“There’s still some concerns around inflation and the direction of how that will end up,” he said. “All indications are that we’ve achieved, miraculously, a soft landing, but now the unknown turns to what does the Fed do with interest rates moving forward. It’s that notion of uncertainty that is continuing to have an impact on business leaders’ ability to make long-term decisions.”

Murphy said he’s not overly worried about the dip in the sales index score, saying the majority of Iowa Business Council members expect higher sales over the next six months, with about a third expecting no change in sales, with only a few expecting a drop in sales.

“They’re not expecting negative sales, it just means lower sales moving forward,” he said. “That’s something we’ll have to keep an eye on … but I’m not overly concerned, particularly when you look at the [increased score for] capital spending. I think that demonstrates that Iowa businesses are looking to invest capital here in Iowa, expand their operations and innovative capabilities to make sure they have a presence in our state for the long term.”