That’s according to the most recent SiouxFalls.Business quarterly CEO survey, conducted in partnership with the Augustana Research Institute and the Sioux Falls Development Foundation.
The survey was conducted during mid-March and completed by 70 CEOs and business owners.
Seventy-eight percent of CEOs said overall conditions in their business were good or excellent, with 21 percent calling them fair. That’s similar to three months ago but showed “more are slipping from great to merely good overall,” Ron Wirtz, regional outreach director for the Minneapolis Federal Reserve, said before last week’s stock tumble.
“There has been some sentiment slippage, but firms there still seem to doing quite well, particularly compared with what we hear elsewhere in the Ninth District.”
More than half still showed at least a slight increase in sales activity for the first quarter, with 29 percent reporting at least a slight decrease.
While the survey was taken before the latest steep market declines related to tariffs, it does reflect some losses experienced in March.
“With all of this volatility in the markets, I would have expected the survey results to be a bit less optimistic,” said Raymond Leach, director of fintech at Augustana University.
“The views on overall business, sales, capital expenditures and hiring all seemed fairly positive but starting to creep downward. This has been a recurring trend where businesses in Sioux Falls are more optimistic about doing business here compared to the rest of the country.”
Sioux Falls CEOs continue to report increased prices for their products and services, with 54 percent reporting at least a slight increase and 5 percent reporting a decrease.
The uptick in pricing is “much like we are seeing in the macro data and from firms elsewhere,” Wirtz said. “And that’s a concern for everyone because we know how pernicious inflation can be for businesses and households.”
The increase “could indicate that businesses are starting to see the effects of the first round of tariffs,” Leach said. “I expect that the ‘Liberation Day’ tariff announcements will cause higher inflation during Q2, and we will see that in the next survey.”
Forty-three percent of CEOs reported at least a slight increase in hiring, and 42 percent said hiring was unchanged, with 16 percent reporting a decrease.
The uptick in hiring is “a positive signal and a bit stronger than we are seeing elsewhere in the (Ninth) District, where hiring sentiment seems to be flat at best,” Wirtz said.
Perceptions of the local and national economies didn’t show any obvious sign of erosion.
Seventy-eight percent called the Sioux Falls business climate good or excellent and 20 percent called it fair, which showed a bit of improvement over the start of the year.
Forty-two percent said the national business climate was good or excellent, the same as three months ago.
Leach cautioned that economic conditions could worsen in the months ahead.
“I expect that we will soon be in a rare scenario known as stagflation in which we are in a recession while simultaneously battling high inflation,” he said.
“This is a tricky spot for a government to navigate out of and something the U.S. hasn’t had to contend with since the 1970s. I expect these effects to be felt through the next quarter, with business sentiment to be much less optimistic in the next round of survey results.”
Still, three in four CEOs reported that they expect at least average business activity for the second quarter, with 19 percent projecting below-average activity for the next three months. That’s somewhat softer than how they anticipated starting 2025.
More than two in three CEOs expect at least average hiring in the second quarter.
And two-thirds also expect at least average spending on capital expenditures.
“What we’re hearing is still uncertainty in the market,” said Bob Mundt, president and CEO of the Sioux Falls Development Foundation. “Those projects who have financing in place are moving forward. We saw this prior to the end of last year, and companies are still waiting for a degree of confidence to invest in capital projects. I think it will shake out by mid-year.”
Because the CEOs’ outlook is similar to a year ago, that “suggests that things are generally pretty stable at a time when we are hearing more about rising uncertainty from businesses,” Wirtz said.
“Uncertainty tends to lead to caution and slowing as companies preserve capital and wait for more information on the direction of things.”
Given the overall positive sentiment here, “it’s harder to see uncertainty among Sioux Falls businesses in survey results,” he continued. “I sort of assume it’s rising because many Sioux Falls businesses face the same, broader pressures as businesses elsewhere. But the survey generally shows a lot of confidence.”
Do you have further information to share about conditions at your business? Or are you looking to connect to additional resources to support your growth? The Sioux Falls Development Foundation can assist you in the following areas:
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