DEED Survey Shows Minnesota Businesses Optimistic this Year

According to an an­nual survey released this month by the Min­nesota Department of Employment and Eco­nomic Development (DEED) and the Fed­eral Reserve Bank of Minneapolis, Minne­sota business services firms expect improved profits, productivity, and job growth over the next 12 months.

The surveyed firms expect minor improve­ments in revenue, profits, productivity, and employment in the coming year. Labor availability is expect­ed to increase slightly, but the supply of work­ers will continue to ex­ert upward pressure on wages. Inflation is pre­dicted to increase as well and nearly 65% of respondents antici­pate raising wages by at least 3% to attract workers in the state’s tight labor market.

On inflation, 56% of respondents expect it to rise over the next year, down from 65% in last year’s survey. This figure reflects cautious optimism about slowing price increases.

The Business Ser­vices Industry Condi­tions Survey gauges the sentiments of Min­nesota business ser­vices firms concerning their own operations and the state economy as a whole.

Accounting firms, computer consultants, advertising and public relations agencies, and other types of service companies support the activities of other businesses. Their per­formance is an indica­tor of overall business conditions and trends across industries and throughout the state. This year’s survey in­cluded responses from 141 businesses.

“Businesses are opti­mistic about Minneso­ta’s economic outlook. Our employers have added jobs eight of the last 12 months and dozens of businesses have announced ex­pansions in our state,” said DEED Commis­sioner Matt Varilek.

CNBC recently ranked Minnesota the sixth best state for business in the coun­try. The study ranked all 50 states on 128 metrics in 10 broad categories of compet­itiveness, including infrastructure, work­force, and quality of life. The study ranks each state based on the attributes it uses to sell itself.

Virginia, North Car­olina, Texas, Georgia, and Florida came in ahead of Minnesota in the annual CNBC rankings.

DEED and the Fed­eral Reserve Bank of Minneapolis have conducted a Survey of Minnesota Busi­ness Services Firms annually since 2006. A detailed report of the 2024 survey, along with each survey done since 2017, is avail­able on the DEED website.

“This survey part­nership with DEED provides us with on-the-ground intelli­gence about the busi­ness conditions and expectations for in­flation and hiring that is key to our under­standing of the nation­al economy,” said Joe Mahon, Regional Out­reach Director for the Federal Reserve Bank of Minneapolis.

The results this year were not all rosy. Busi­ness services firms are pessimistic about the outlook for the overall economy in the com­ing year. Declines in consumer spending indicate further con­traction. Similarly, the survey reflects dimin­ishing profitability. Respondents expect inflation to rise, re­flecting cautious op­timism about slowing price increases.

A question about credit conditions re­vealed that businesses experienced a slight deterioration com­pared to last year. Roughly 40% report higher interest rates, up from 35% the year before.

DEED is Minneso­ta’s principal econom­ic development agen­cy. It is charged with promoting business re­cruitment, expansion, retention, workforce development, interna­tional trade, and com­munity development. Find out more about DEED by visiting the DEED website, https://mn.gov/deed/.