Compared with a year ago at this time, business leaders across Minnesota entered the fourth quarter more optimistic about global business conditions than conditions here in Minnesota, according to Twin Cities Business’ quarterly economic indicator survey.
The state’s only forward-looking economic indicator survey found that 34 percent of leaders say they expect the state’s business conditions to improve by Dec. 31. Such optimism is only 2 percent higher than 12 months ago, and is slightly below the trailing nine-month average of responses since the survey began in 2011.
Twin Cities Business conducts the quarterly economic indicator survey for a snapshot of business planning and sentiment among leaders across all industries in Minnesota. The survey looks at what companies expect in the upcoming quarter in key areas. It also asks about business leaders’ outlook on hiring qualified employees, obtaining financing, and economic conditions in Minnesota and globally.
An email link to an online survey was sent to 16,081 Minnesota business leaders in mid-September; a reminder email was sent the following week. The Minnesota Chamber of Commerce provided some of the email addresses. As of September 30, 489 businesses responded, resulting in a 3 percent net response rate. Of those who responded, 84 percent represented privately held businesses.
Meanwhile, Minnesota business leaders’ optimism about improvement in global business conditions increased nearly 17 percent from the fourth quarter of 2012 and has moved above the trailing nine-month average in this category. Elsewhere, global executives surveyed by McKinsey & Co. in September also indicated increasing optimism about the direction of the world economy, in particular about developed markets compared with markets that are still developing.
Twin Cities Business’ survey found that Minnesota businesses are holding steady on growth-oriented investments such as research and development, capital expenditures, and hiring during the fourth quarter, compared with one year ago at this time. They’re anticipating slight gains in revenue and significant increases in operating profit margins, despite plans to keep their selling prices relatively flat, and expect continued difficulty finding top talent and financing.
More than 350 respondents also shared their thoughts with write-in answers to questions about their greatest challenges this quarter. Overall growth strategy seems to have gained strength; the recent recession, 9/11, and rounds of government- and regulatory-induced business and economic setbacks have made Minnesota businesses tougher and better able to compete than they’ve been in decades, business leaders indicate. Businesses also continue to say their biggest obstacle is the negative impact of the battle of tea party-allied senators and members of Congress with President Obama.
Comments from respondents included the following:
“The economic conditions seem to be taking their toll on employee morale. You can only say ‘Stay hopeful’ for so long before people get tired and start complaining. No bonuses predicted this year, which is the third year in a row. Staff is starting to focus on the negative qualities of work and to look for other opportunities.”
“I employ fewer than 10 people, as well as many independent contractors. They all make good money. Given the tax structure/business environment here, I wonder if it is time to hang it up. My house is paid for, my kids can go through college and my retirement is set. If I hang it up, it will impact about 50 people, yet it’s looking more attractive to do this every day. When a single mom with two kids on food stamps, rent assistance, federal health insurance, etc., can ‘make’ $30,000 a year in these benefits—which is more than my recent college grad kid can make after a $160,000 Minnesota-based college education—something is seriously wrong.”
On a related note, Dale Carnegie Training Minneapolis conducts a quarterly Minnesota Pulse Survey. Its findings through September found slight increasing and improving trends in the clarity people have about the direction of their organizations; the strength of their belief in their senior leadership, and individuals’ sense of alignment with the direction of their organizations.
There was a decrease in how much respondents said they feel valued at work, the amount of support they receive in their organizations, and the degree of optimism they have in their organization’s financial performance during the next three months.
The Pulse survey also found people would be willing to leave their current jobs for less of a pay raise than what they were looking for three months earlier. There also was a 22 percent (5 percentage point) increase in the percent of respondents who said they would not leave for any increase.
The following tables (Business Conditions and Business Planning) reflect the percentage of respondents anticipating increases or improvements in these areas during the fourth quarter of 2013 – diffusion index view: All responses for “increase” or “improve,” plus one-half responses for “maintain” or “stay the same.” Above 50 is positive; below is negative.