Minnesota Business Services Firms Expect Continued Economic Recovery in the Next Year

St. Paul – Minnesota business services firms expect continued recovery from the pandemic recession during the next four quarters, with 55% of respondents expecting increase in consumer spending and 46% anticipating growth in employment. Those are the results released today from a joint survey conducted in May and June of this year by the Minnesota Department of Employment and Economic Development (DEED) and the Federal Reserve Bank of Minneapolis.

Surveying business services firms – such as engineers, accountants and architects –offers a compelling glimpse into economic conditions because these businesses provide their services to other businesses across the full range of industries in the economy. This year, 201 Minnesota business services firms responded to the survey. Most of those business services firms surveyed expect unchanged or improving conditions for the coming year.

Areas of concern among survey respondents include inflation and labor availability. Nearly 75% of respondents believe there will be an increase in inflation and 96% expected unchanged or decreased labor availability over the coming year.

"While Minnesota is showing promising signs of economic recovery, labor availability issues are a real concern," said DEED Commissioner Steve Grove. "We're continuing to work with Minnesota businesses to help them find the employees they need to grow and thrive. Matching available workers with available jobs – many of them requiring new skills or in different geographic areas – will take some time."

New pandemic related questions were added to the survey this year and last year. A significant share of respondents stated that they allowed employees to work from home (48%), but the percentage was lower compared to the year before (64%). In a related question, 44% of respondents indicated they have returned to work in-person since January 2021, however 22% of respondents indicated that they will allow employees to telework permanently.

In addition to looking forward to the coming year, the survey also asked respondents about the previous 12 months. The pandemic had a particularly negative effect on business services profits and revenue, with more than 50% of respondents experiencing a decline. Additionally, 34% indicated reduced employee productivity.

DEED and the Federal Reserve Bank of Minneapolis have conducted this survey annually since 2006. You can see a detailed report of the 2021 Survey of Minnesota Business Services Firms on the DEED website.

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.

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 or follow us on Twitter.