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/.
