Release Date: 09/ 01/ 2005
CONTACT: Michael Diegel or Melissa Sharp, (202) 554-9000
Job openings slightly improving going into fourth quarter
ST. PAUL, Minn. -- Opinions of small-business owners about Minnesota’s overall business climate and outlook for business became more pessimistic heading into the fall, according to the Minnesota Small-Business ConditionsSM. The report’s data, released today by the National Federation of Independent Business/Minnesota, provides an overview of small-business conditions within Minnesota and compares them with neighboring states.
A net 33 percent (positive percent minus negative percent) of the state’s small employers believed business conditions in their market area are “good,” down from a net 41 percent in the second quarter. The number of those who see conditions “improving” declined from a net 15 percent in June to a net 3 percent this quarter, while a net 53 percent characterized the outlook for business over the next three months as “good,” down from a net 61 percent in June.
“Sixty percent of Minnesota’s small-business owners are reporting increased costs, which isn't surprising given rising energy prices,” said Mike Hickey, NFIB/Minnesota’s state director. “But only 16 percent said they had raised prices, putting considerable pressure on profits. With no energy price relief in sight, it’s not surprising that owners are somewhat leery about the next few months.”
The job outlook for employees improved slightly, though, with the number of respondents who said they had one or more job openings rising from a net 16 percent in June to a net 23 percent in August. When asked how they would increase employee compensation by the equivalent of $1 per hour, 65 percent of small-business owners said they would provide it in the form of wages, with 6 percent saying they would increase health benefits and 5 percent saying they would increase retirement benefits.
While small-business owners’ opinions of the business climate and business conditions in Iowa and Wisconsin generally held steady from the second quarter to the third, they shared with Minnesota the declining optimism for the next quarter. Those surveyed in Iowa who described the outlook as “good” for the next three months dropped from a net 64 percent to a net 55 percent, while in Wisconsin, the numbers dropped from a net 68 percent to a net 60 percent. The job outlook in those states remained stable compared to June.
The Small-Business ConditionsSM reports are developed from surveys of small-business owners in selected states. The surveys are designed to determine the condition of the small-business economy in each particular state. The surveys are conducted every three months and results are released on the first day of the month following completion.
| Minnesota Small-Business ConditionsSM | ||||||
| This chart shows the results from Minnesota and its comparative standing among selected nearby states. | ||||||
| Minn. | Iowa | Wis. | ||||
| Business Climate | Survey Date | |||||
| Overall state business environment | ||||||
| Net % supportive of small business | 5/2005 | 17 | 32 | 17 | ||
| Prior qtr. | 26 | 34 | 31 | |||
| Business conditions in market area | ||||||
| Net % "good" | 5/2005 | 33 | 41 | 36 | ||
| Prior qtr. | 41 | 45 | 40 | |||
| Net % "improving" | 5/2005 | 3 | 5 | 6 | ||
| Prior qtr. | 15 | 9 | 19 | |||
| Outlook for business | ||||||
| Net % "good" in next three months | 5/2005 | 53 | 55 | 60 | ||
| Prior qtr. | 61 | 64 | 68 | |||
| Reason for optimism | ||||||
| % Sales prospects | 5/2005 | 43 | 41 | 49 | ||
| Prior qtr. | 46 | 41 | 44 | |||
| % Lower costs | 5/2005 | 2 | 1 | 2 | ||
| Prior qtr. | 2 | 3 | 2 | |||
| % Price increases | 5/2005 | 3 | 2 | 3 | ||
| Prior qtr. | 5 | 5 | 5 | |||
| % Greater productivity | 5/2005 | 14 | 17 | 11 | ||
| Prior qtr. | 13 | 14 | 14 | |||
| % Government policy | 5/2005 | 2 | 2 | 2 | ||
| Prior qtr. | 3 | 4 | 4 | |||
| % Seasonal/Weather | 5/2005 | 14 | 9 | 10 | ||
| Prior qtr. | - | - | - | |||
| Reason for pessimism | ||||||
| % Sales prospects | 5/2005 | IC* | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Cost increases | 5/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Pressure on selling prices | 5/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Lower productivity | 5/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Government policy | 5/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| Minn. | Iowa | Wis. | ||||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 5/2005 | 44 | 43 | 42 | ||
| Prior qtr. | 39 | 55 | 43 | |||
| Profits | ||||||
| Net % profits "good" | 5/2005 | 18 | 25 | 22 | ||
| Prior qtr. | 23 | 33 | 23 | |||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 5/2005 | 23 | 18 | 24 | ||
| Prior qtr. | 16 | 16 | 20 | |||
| Per employee payroll cost | ||||||
| Net % "risen" | 5/2005 | 21 | 18 | 20 | ||
| Prior qtr. | 17 | 16 | 12 | |||
| Employee cost pressures (greater) | ||||||
| % Wages | 5/2005 | 55 | 56 | 49 | ||
| Prior qtr. | 51 | 58 | 53 | |||
| % Benefits | 5/2005 | 30 | 28 | 35 | ||
| Prior qtr. | 30 | 24 | 33 | |||
| Minn. | Iowa | Wis. | ||||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 5/2005 | 45 | 38 | 41 | ||
| Prior qtr. | 47 | 33 | 41 | |||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 46 | 43 | 45 | ||
| Prior qtr. | 46 | 36 | 41 | |||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 5/2005 | 42 | 40 | 44 | ||
| Prior qtr. | 41 | 33 | 36 | |||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 5/2005 | 55 | 52 | 54 | ||
| Prior qtr. | 53 | 53 | 56 | |||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 5/2005 | 41 | 41 | 43 | ||
| Prior qtr. | 43 | 41 | 41 | |||
| % All credit needs not satisfied | 5/2005 | 6 | 6 | 6 | ||
| Prior qtr. | 5 | 4 | 6 | |||
| % No credit needs | 5/2005 | 47 | 47 | 48 | ||
| Prior qtr. | 43 | 49 | 46 | |||
| Minn. | Iowa | Wis. | ||||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 5/2005 | 59 | 59 | 63 | ||
| Prior qtr. | 56 | 58 | 54 | |||
| Selling prices (last three months) | ||||||
| Net % increased | 5/2005 | 16 | 15 | 22 | ||
| Prior qtr. | 19 | 22 | 20 | |||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 5/2005 | 10 | 9 | 9 | ||
| Prior qtr. | 9 | 9 | 8 | |||
| Single most important business problem | ||||||
| % Weak sales | 5/2005 | 14 | 9 | 11 | ||
| Prior qtr. | 13 | 9 | 10 | |||
| % Taxes | 5/2005 | 9 | 10 | 12 | ||
| Prior qtr. | 11 | 11 | 15 | |||
| % Employee quality/costs | 5/2005 | 9 | 8 | 9 | ||
| Prior qtr. | 7 | 7 | 6 | |||
| % Insurance | 5/2005 | 17 | 20 | 20 | ||
| Prior qtr. | 18 | 19 | 23 | |||
| % Big-business competition | 5/2005 | 13 | 18 | 13 | ||
| Prior qtr. | 14 | 12 | 15 | |||
| % Inflation/Rising prices | 5/2005 | 14 | 11 | 12 | ||
| Prior qtr. | 14 | 19 | 13 | |||
| % Credit availability/Interest rates | 5/2005 | 3 | 2 | 1 | ||
| Prior qtr. | 3 | 4 | 3 | |||
| % Regulations/Red tape | 5/2005 | 6 | 9 | 8 | ||
| Prior qtr. | 7 | 7 | 4 | |||
| Minnesota Quarterly Spotlight | |
| If your employees could choose, how would they like to receive a compensation increase of $1.00 per hour? Do you think they would like the increase in… | |
| Wages or salary | 65% |
| Health benefits | 6% |
| Retirement benefits | 5% |
| Paid leave | 2% |
| Or, some other way? | 8% |
| Wouldn't give increase | 3% |
| Don't know/Refused | 11% |
| Total | 100% |
| If you were to give your employees a compensation increase equivalent to $1.00 per hour, how would you do it? Would you give it to them in… | |
| Wages or salary | 77% |
| Health benefits | 7% |
| Retirement benefits | 3% |
| Paid leave | 1% |
| Or, some other way? | 3% |
| Wouldn't give increase | 1% |
| Don't know/Refused | 7% |
| Total | 100% |
The Poll
NFIB’s Minnesota Small-Business ConditionsSM is a telephone survey of a random sample of Minnesota small employers regarding business conditions within the state. “Small employer” is defined here as employing between one and 250 people (not including the owner(s)) in a for-profit business. Each edition of the survey has a minimum of 350 respondents. The sampling error is ± 5 percentage points. Data are collected quarterly in the months of February, May, August and November, beginning in February 2005. The MRCGroup of Las Vegas conducts the survey for the NFIB Research Foundation.
The Sponsor
The NFIB Research Foundation is a 501 (c)(3) organization that provides policy-makers, media, educators, small-business owners and other interested parties empirically based information on small business and small-business owners. The Foundation is affiliated with the National Federation of Independent Business, the nation’s largest small- and independent-business advocacy organization, and is located in Washington, D.C.
