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By Jodi Schwan
Chief executive officers in Sioux Falls feel considerably better about the local economy than they do about the national economy.
Ninety-six percent rate the local business climate as good or excellent, compared with 71 percent who say the same about the national business climate.
That’s one finding of the first bimonthly CEO survey conducted by SiouxFalls.Business in partnership with the Augustana University Research Institute.
“Sioux Falls certainly ranks high in stability because of its performance during the Great Recession and the metro area’s continued population growth,” said Robert Wright, Nef Family Chair of Political Economy at Augustana,adding that recent Wall Street Journal articles about the city’s growth and strong high-end housing market “will help to maintain the local growth momentum.”
Almost 70 Sioux Falls-area CEOs completed the survey, which asked about business conditions at their organizations as well as their expectations for growth.
Ninety percent rated overall business conditions at their organization as good or excellent.
“Our business conditions are beyond excellent and have been for years,” said Steve Kirby, founding partner of Bluestem Capital Co. “Our pricing hasn’t changed, and our sales activity is way up with currently fundraising our 34th investment project or fund.”
According to 46 percent of survey respondents, prices charged for products and services have largely stayed the same in the past two months. Almost four in 10 said there had been slight increases, while 7 percent saw significant increases.
About two-thirds reported slight or significant increases in sales activity in the past two months, while 6 percent reported a slight decrease.
“The strong increase in sales volume but not prices is consistent with official inflation data, which is up but still near the Fed’s target, and the beginning of a more robust expansion than we have seen since the panic of 2008,” Wright said.
About one-third of the CEOs reported no increase in hiring during the past two months, while 36 percent increased slightly. Six percent increased significantly, and none decreased.
Seven out of 10 organizations had done at least some investing in capital expenditures, with 35 percent reporting significant spending.
“My first noticeable surprise was sales activity,” said Tony Ratchford, a real estate broker with The Tony Ratchford Group of Keller Williams Realty Sioux Falls. “That is huge given the national economy. The same goes for hiring. All these numbers are much higher than I would have expected and supports a high regard for our community in general.”
Wright, who tracks leading macroeconomic indicators, said none is “blinking red, so the probability of a major macroeconomic shock occurring soon is quite low.”
The Trump administration remains a wildcard, he said, but with the Republican majority in Congress and the Supreme Court back at status quo, “there are not clear reasons not to invest in one’s business, as a large, negative shock looming from Washington seems unlikely over the next 3.5 years.”
CEOs locally seem to agree. Looking ahead two months, 25 percent expect above-average hiring, and 62 percent expect average hiring. Six percent expect below-average hiring, and 7 percent aren’t sure. Two percent expect below-average business activity in the next two months, and 55 percent expect above-average activity.
Bluestem, which hired its eighth employee earlier this year, expects continued growth, Kirby said.
“Our level of activity will remain high,” he said. “Our business community, for many I speak with, is ‘numbing.’ What they have to worry about is finding labor, but the opportunities are endless it seems. While countries like Australia or communities around the U.S. like Detroit are shrinking, we are the polar opposite.”
CEOs in Sioux Falls feel considerably better about the local economy than they do about the national economy.