85% of Minnesota DEED, Federal Reserve Bank surveyed businesses say inflation will continue to rise

Minnesota business services firms don’t expect economic conditions to change much in the coming year, according to a state survey released Monday.

The Minnesota Department of Employment and Economic Development and the Federal Reserve Bank in Minneapolis sponsored the survey, in which 224 randomly selected firms in May and June were surveyed. The response rate was18.7%, the report said.

A DEED news release said higher costs of goods, including food and energy, due predominately to the COVID-19 pandemic and the Russian invasion of Ukraine, prompted most respondents to anticipate more inflation.

Eighty-five percent of respondents said they believe inflation will rise, the report said. Forty-three percent said consumer spending will decrease. The same percent said they expect corporate profits to decrease.

Nearly two-thirds of respondents said they anticipate unchanged levels of employment, while about one-third said they anticipate labor availability to decline.

About 46% of firms said they anticipate selling prices to increase while 8% said selling prices would decrease.

“The survey shows what I think many of us have come to recognize – that inflation and labor availability are major concerns going forward,” DEED Commissioner Steve Grove said in a statement. “To help businesses find workers and connect Minnesotans to higher-paying jobs this summer, we are travelling around the state on our ‘Summer of Jobs’ campaign to connect workers with employment available right now in our state.”

Firms also reported the past year’s business conditions. About 60% said neither productivity nor labor availability had changed, the report said. Thirty-seven percent said labor availability decreased. Seventy-one percent of respondents said input costs increased.

Twenty-two percent of businesses said all employees are back working onsite full-time while 21% said some employees are teleworking. Nineteen percent of businesses have a telework mode of a few days per week. The most common reasons businesses reported they aren’t involving telework in the worker setup are that the work requires people onsite (16%) or they don’t see any savings (11%).

About 47% of businesses reported they are not owned by minorities, women or veterans. About one-third of businesses said they are woman-owned while 11% said they are veteran-owned. Five percent said they are minority-owned, and 8% said they preferred not to answer.

DEED and the Federal Reserve Bank of Minneapolis have conducted the survey annually since 2006.

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