Annual Business Survey Shows Improvement in Key Areas

Business services firms cautiously optimistic for coming year.

St. Paul - Minnesota business services firms are cautiously optimistic about the workforce shortage and inflation easing in the coming year, according to a survey of Minnesota businesses service firms conducted by the Minnesota Department of Employment and Economic Development (DEED) and the Federal Reserve Bank of Minneapolis.

Results from the random survey of 229 Minnesota business services firms show 68% of respondents believe over the next year labor availability will stay the same, 7% think it will go up and 25% think it will go down, a slight improvement over last year’s responses (62%, 5% and 33%, respectively). However, to attract workers, 53% of respondents anticipate increasing wages by at least 3%.

“The survey backs up the fact that Minnesota’s extremely tight labor market remains a defining feature of our state economy right now, but there are signs the workforce shortage is easing,” said Federal Reserve Bank of Minneapolis Regional Outreach Director Joe Mahon. “More and more Minnesotans are joining or rejoining the labor force, in some cases attracted by wages that have increased significantly in some fields over the past couple years.”

“At DEED we continue to focus on connecting people looking for work with the employers who need them," said DEED Commissioner Matt Varilek. “We’re rolling out new tools and services to do this in the coming months, thanks to legislative support this past session.”

Surveyed firms also show some expectations that key state economic indicators will move in a positive direction in the coming year: 65% expect inflation to continue to go up – but that’s down from 85% in 2022. And 40% expect consumer spending to go down – but that’s an improvement from 43% in 2022.

The Business Services Industry Conditions Survey gauges the sentiments of Minnesota business services firms concerning their own operations, as well as 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, and their performance is an indicator of overall business conditions and trends across industries and throughout the state.

DEED and the Federal Reserve Bank of Minneapolis have conducted this survey annually since 2006. A detailed report of the 2023 Survey of Minnesota Business Services Firms is available on the DEED website.

DEED is the state’s principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and its services, visit the DEED website, JoinUsMn.com and CareerForceMN.com, or follow us on Twitter.

The Federal Reserve Bank of Minneapolis is one of 12 regional Reserve Banks that, with the Board of Governors in Washington, D.C., make up the Federal Reserve System, the nation's central bank. The Federal Reserve Bank of Minneapolis is responsible for the Ninth Federal Reserve District, which includes Montana, North and South Dakota, Minnesota, northwestern Wisconsin, and the Upper Peninsula of Michigan. The Federal Reserve Bank of Minneapolis participates in setting national monetary policy, supervises numerous banking organizations, and provides a variety of payments services to financial institutions and the U.S. government.

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Upon request, this information can be made available in alternate formats for people with disabilities by contacting the DEED Communications Office at 651-259-7161.