Iowa businesses are entering the second quarter of 2026 with a growing sense of optimism, according to the latest survey from the Iowa Association of Business and Industry (ABI). Although challenges related to workforce availability, rising healthcare costs, and policy uncertainty persist, a majority of employers anticipate sales growth and are planning investments in their operations. The ABI’s second-quarter Business Survey reveals a shift in sentiment, signaling a potentially stronger economic outlook for the state.
The survey, which gathered responses from ABI board members, found that 62% of respondents expect sales to expand in the next quarter, a significant increase from the 39% who anticipated growth in the fourth quarter of 2025. This positive outlook is coupled with ambitious hiring plans, with 57% of businesses planning to increase their workforce – more than doubling the 37% who had similar intentions in the first quarter of the year. Capital investment remains robust, as 71% of respondents are planning expenditures, with 19% anticipating significant investments. This indicates a willingness among Iowa businesses to invest in their future despite ongoing economic headwinds.
Economic Sentiment Improves, But Concerns Remain
Overall economic sentiment has also seen a marked improvement. 48% of respondents reported an optimistic outlook, compared to 37% in the previous quarter. “We’re seeing growing confidence among Iowa employers heading into the second quarter, even as uncertainty remains in today’s economy,” said Nicole Crain, ABI President, in a prepared statement. “The results reinforce the need for consistency and clarity as businesses continue investing and navigating challenges.”
Despite the positive trends, Iowa businesses continue to grapple with several key challenges. Workforce shortages remain the most pressing concern, consistently cited as a major obstacle to growth. Rising healthcare costs, supply chain disruptions, and energy costs also weigh heavily on employers. Open-ended responses to the survey highlighted additional concerns, including instability related to tariffs, proposed property tax changes, and broader uncertainty surrounding federal policies.
National Trends Mirror Iowa’s Optimism
The ABI’s findings align with broader national trends indicating increased optimism among U.S. Manufacturers. Reports from the National Association of Manufacturers, for example, demonstrate a similar uptick in confidence, though manufacturers also express concerns about trade uncertainty and rising input costs. This suggests that the positive sentiment in Iowa is part of a larger, national pattern.
Workforce Development a Key Priority
The ongoing workforce shortage is a particularly acute issue for Iowa businesses, especially in skilled industrial roles. Respondents consistently emphasized the need for improved workforce development programs and initiatives to address the skills gap. This concern underscores the importance of investing in education and training to ensure that Iowa has a workforce capable of meeting the demands of a changing economy. The ABI conducts its quarterly survey of its board members to track business sentiment, identify common concerns, and inform its advocacy and programming priorities.
The survey also revealed that businesses are looking for stability and predictability in the current economic climate. The desire for “consistency and clarity,” as emphasized by ABI President Crain, suggests that businesses are seeking a more stable policy environment to support their investment decisions. This highlights the importance of state-level policies in fostering a favorable business climate.
Looking ahead, the ABI will continue to monitor economic conditions and advocate for policies that support Iowa businesses. The next quarterly survey will provide further insights into the evolving economic landscape and the challenges and opportunities facing employers in the state.
Disclaimer: This article provides general information about economic trends and business sentiment. It is not intended to provide financial or investment advice. Consult with a qualified professional for personalized guidance.
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