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Minnesota business firms report inflation, wages expectations in state survey

(The Center Square) – Minnesota businesses reported their experience and expectations regarding inflation and other economic indicators in a new survey.

The Minnesota Department of Employment and Economic Development and the Federal Reserve Bank of Minneapolis surveyed randomly selected 229 Minnesota firms in May and June, according to the report. The department announced the results this week.

The survey found that 53% of respondents said they anticipate increasing wages per worker by at least 3%, while 37% said they may increase benefits by at least that percentage. Five percent said they expect to have to lower wages, and 3% said they anticipate lowering benefits.

Forty-eight percent said that compared with 2022, inflation pressure from wages is worse, while 41% said it’s the same. Sixty-five percent said that inflation pressure from the cost of utilities and from the cost of materials or other inputs is worse compared with last year, and none reported that inflation pressures from rent or cost of utilities has eased. Two-thirds of respondents said inflation pressures from rent have remained the same since 2022. However, inflation pressure from falling demand for their companies’ services and from supply chain disruptions have gotten better, according to 16% and 14% of respondents, respectively.

About 56% anticipate employment levels to remain constant. In the past year, there was modest growth in sales revenue and productivity, but 53% of respondents said labor availability didn’t change while 42% said it decreased. Last year’s survey indicated 62% of firms believed the upcoming year’s labor availability would stay the same while 5% believed it would increase and 33% believed it would go down. This year, 68% said they believe labor availability will stay the same and 7% said it would go up. One in four believe it will decrease.

Forty percent, down from 43% last year, expect consumer spending to decrease. Sixty-two percent of respondents said input costs increased. Sixty-five percent, down from 85% last year, believe inflation will continue to increase.

The performance of service companies, such as accounting firms, computer consultants, advertising and public relations agencies that support other businesses, help give a sense of business conditions and trends across industries and the state, the release said. DEED and the Federal Reserve Bank of Minneapolis have conducted the annual survey since 2006.

“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,” Federal Reserve Bank of Minneapolis Regional Outreach Director Joe Mahon said in the release. “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.”

DEED Commissioner Matt Varilek said the department is rolling out new tools and services to connect job seekers with employers following legislation that was passed this year.

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