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Business Services Firms Optimistic About Economy

Most expect stability or growth next year

6/30/2016 1:31:32 PM

Monte Hanson, 651-259-7149
Monte.Hanson@state.mn.us

ST. PAUL – More than 80 percent of Minnesota business services firms expect sales and profits to climb or remain stable next year, according to a joint study released today by the Minnesota Department of Employment and Economic Development (DEED) and the Federal Reserve Bank of Minneapolis.

Business services firms expressed similar levels of optimism when asked about productivity, employment levels, exports, selling prices and other economic measures. Firms that offer business services specialize in such areas as accounting, engineering, public relations, computers and other support activities for companies.

"Business services firms are a good barometer of how the overall economy is doing," said DEED Commissioner Shawntera Hardy. "If they feel confident the economy is stable or growing, that often translates into new investments in areas such as hiring and expansions"

The following were among the survey findings:

1. 41 percent expect sales to grow next year, 44 percent expect sales to stay the same.

2. 39 percent expect profits to grow next year, 42 percent expect profits to stay the same.

3. 30 percent expect productivity to grow next year, 63 percent expect productivity to stay the same.

4. 21 percent expect employment levels to grow next year, 69 percent expect employment levels to stay the same.

5. 5 percent expect exports to grow next year, 91 percent expect exports to remain the same.

The firms also had a positive outlook about business conditions over the past year. When asked about sales, 77 percent said revenue had climbed or stayed the same in the past 12 months and 72 percent said profits had climbed or stayed the same over that period.

The vast majority of respondents also said productivity, employment levels, labor availability and exports improved or stayed the same during the previous four quarters.

In a new question in this year's survey, businesses were asked about the consequences of a tighter labor force. Forty-three percent said they had not experienced significant changes in labor levels. Twenty-nine percent said, however, their staffs are working longer hours and 15 percent said they are paying higher wages because of a limited labor force.

DEED and the Minneapolis Fed conducted the random sample survey in May and June, collecting responses from 242 firms in Minnesota. The survey has a sampling error of plus or minus 6.2 percent at a 95 percent confidence level.

More results from the survey can be found here.

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 our services, visit the DEED website or follow DEED on Twitter.

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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.

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