Sioux Falls CEO survey finds surprising uptick in hiring, cautious projections

Sioux Falls CEOs reported a noticeable surge in hiring in the second quarter, along with fairly solid overall business conditions.

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-June and completed by almost 70 CEOs and business owners.

Seventy-one percent said conditions in their businesses were good or excellent, down from 78 percent in the first quarter.

Forty-two percent reported an increase in sales activity in the prior three months, while about one in four were flat, and 32 percent saw some kind of decrease.

“I think we’re seeing our industries reacting to some of the national uncertainty related to tariffs, interest rates and a softening demand for products as a result,” said Bob Mundt, president and CEO of the Sioux Falls Development Foundation.

“Our industries have always been conservative and are tightening their belts and prepping for the long haul but staying in a position to act when the time is right.”

More than half of CEOs reported at least some increase in prices for products and services, on par with the prior three months.

“That’s a pretty large increase as surveys go but also maybe less than might have been predicted given the attention to new tariffs,” said Ron Wirtz, regional outreach director for the Minneapolis Federal Reserve.

“Overall, things seem relatively stable and positive, though there are some whispers of concern.”

Hiring stood out as the key surprise for those analyzing the survey.

More than one-third of CEOs reported a significant increase in hiring in the second quarter, versus 8 percent three months prior, and 45 percent reported a slight increase, compared with 35 percent in the first quarter.

“There was a significant uptick in hiring activity among Sioux Falls businesses, which is something I didn’t anticipate based on last quarter’s forecasts,” said Raymond Leach, director of fintech at Augustana University.

“At the national level, the June jobs report also surprised with higher-than-expected job growth and the unemployment rate ticking down from 4.2 percent to 4.1 percent. Right now, labor market strength continues to be the biggest pillar supporting the U.S. economy.”

Hiring “was a major positive sign,” Wirtz said. “I’ve generally not heard or seen that kind of positive hiring activity elsewhere; if anything, companies have been telling us that they are holding off on hiring given the uncertainty of the current economic environment.”

Looking ahead, almost three-quarters of CEOs expect at least average business activity for the coming quarter, slightly less optimistic than three months ago.

Some broader factors also could be at play, Leach said.

While U.S. employment remains strong, GDP contracted by 0.5 percent in the first quarter.

“One major driver was a surge in imports as firms rushed to bring in foreign goods before tariffs potentially take effect. Increases in imports negatively weigh on GDP,” he said.

“Inflation remains above the Fed’s 2 percent target, but prices have been relatively stable in recent months. We now look to the July 9 expiration of the 90-day pause on the Liberation Day tariffs. If the Trump administration allows them to go into effect, we could see additional drag on growth and further hesitation from businesses regarding investment and hiring.”

Almost two-thirds of CEOs expect at least average capital expenditures in the third quarter, with 31 percent anticipating they will spend less.

The hiring outlook is tempered, with 8 percent expecting above-average hiring and half anticipating average hiring. More than one-third expect below-average hiring, suggesting that the hiring in the second quarter was maybe “some kind of one-time bump or anomaly,” Wirtz said.

Sentiment about the Sioux Falls business climate has been drifting downward from largely good or excellent to primarily good or fair.

The perception of the overall U.S. business climate is mostly fair, though more than one-third rated it good or excellent.

“This tempered optimism likely stems from softening sales and lingering trade uncertainty,” Leach said. “Businesses are finding it difficult to plan strategically when it’s unclear whether the pending tariffs will be implemented or postponed again. Despite this, the relatively stable job market and steady consumer prices may be giving firms just enough reason to stay cautiously positive.”

Sioux Falls Development Foundation resources

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:

• Workforce development: The Development Foundation offers programs and initiatives to help you attract, retain and develop your workforce. Contact Denise Guzzetta, vice president of talent and workforce development, at 605-274-0475 or deniseg@siouxfalls.com.
•  Business growth and expansion: Whether your business is planning an expansion in the next five years or facing risk factors impacting growth, the Development Foundation can help by discussing existing building space, available land, potential local and state incentives and other resources. Contact Mike Gray, director of business expansion and retention, at 605-274-0471 or mikeg@siouxfalls.com.

The post Sioux Falls CEO survey finds surprising uptick in hiring, cautious projections appeared first on SiouxFalls.Business.