Release Date: 12/ 01/ 2005
CONTACT: Michael Diegel or Melissa Sharp, (202) 554-9000
Improvement seen, but future uncertain
ST. PAUL, Minn. -- The number of small-business owners who feel good about Minnesota’s overall business climate and outlook for business is higher than it has been all year, 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 27 percent (positive percent minus negative percent) said the state’s business environment is “supportive” of small businesses, a 10-percentage point jump from last quarter’s net 17 percent, which ranks Minnesota11th of the 26 states surveyed. The business environment includes government officials, bankers, media and community organizations.
However, there are some indications that business owners have mixed feelings about the future. A net 35 percent of the state’s small employers believed current business conditions in their market area are “good,” about the same as the net 33 percent in the previous quarter. The number of those who see conditions “improving” declined from a net 3 percent in September to a net negative 3 percent this quarter.
“We’ve clearly made some progress, though we still have work ahead of us,” said Mike Hickey, NFIB/Minnesota’s state director. “Sixty-eight percent of Minnesota’s small-business owners are reporting rising costs, especially energy and insurance prices, but only 22 said they had raised prices. With that kind of pressure on profits, it’s no wonder that owners’ opinions about business conditions are mixed. A majority of small-business owners, though, are optimistic about the next three months, with a net 55 percent believing the outlook for business is good.”
The job outlook for employees declined slightly, with the number of respondents who said they had one or more job openings falling from a net 23 percent in September to a net 19 percent in December. Further, small-business owners identified the price of energy as the element of their total costs rising most rapidly, followed by insurance and materials. The overall attitudes of Minnesota’s small-business owners were largely equivalent to their fellow owners in Iowa and Wisconsin.
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 | 11/2005 | 27 | 37 | 23 | ||
| Prior qtr. | 17 | 32 | 17 | |||
| Business conditions in market area | ||||||
| Net % "good" | 11/2005 | 35 | 40 | 35 | ||
| Prior qtr. | 33 | 41 | 36 | |||
| Net % "improving" | 11/2005 | -3 | 4 | 4 | ||
| Prior qtr. | 3 | 5 | 6 | |||
| Outlook for business | ||||||
| Net % "good" in next three months | 11/2005 | 55 | 57 | 51 | ||
| Prior qtr. | 53 | 55 | 60 | |||
| Reason for optimism | ||||||
| % Sales prospects | 11/2005 | 51 | 42 | 45 | ||
| Prior qtr. | 43 | 41 | 49 | |||
| % Lower costs | 11/2005 | 3 | 6 | 7 | ||
| Prior qtr. | 2 | 1 | 2 | |||
| % Price increases | 11/2005 | 3 | 4 | 5 | ||
| Prior qtr. | 3 | 2 | 3 | |||
| % Greater productivity | 11/2005 | 19 | 16 | 14 | ||
| Prior qtr. | 14 | 17 | 11 | |||
| % Government policy | 11/2005 | 2 | 5 | 6 | ||
| Prior qtr. | 2 | 2 | 2 | |||
| % Seasonal/Weather | 11/2005 | 9 | 13 | 10 | ||
| Prior qtr. | 14 | 9 | 10 | |||
| Reason for pessimism | ||||||
| % Sales prospects | 11/2005 | IC* | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Cost increases | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Pressure on selling prices | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Lower productivity | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| % Government policy | 11/2005 | IC | IC | IC | ||
| Prior qtr. | IC | IC | IC | |||
| Minn. | Iowa | Wis. | ||||
| Sales and earnings (last quarter) | ||||||
| Sales | ||||||
| Net % sales "good" | 11/2005 | 41 | 43 | 41 | ||
| Prior qtr. | 44 | 43 | 42 | |||
| Profits | ||||||
| Net % profits "good" | 11/2005 | 16 | 26 | 22 | ||
| Prior qtr. | 18 | 25 | 22 | |||
| Employment | ||||||
| Current job openings (one or more) | ||||||
| % "Yes" | 11/2005 | 19 | 21 | 21 | ||
| Prior qtr. | 23 | 18 | 24 | |||
| Per employee payroll cost | ||||||
| Net % "risen" | 11/2005 | 24 | 16 | 19 | ||
| Prior qtr. | 21 | 18 | 20 | |||
| Employee cost pressures (greater) | ||||||
| % Wages | 11/2005 | 53 | 57 | 55 | ||
| Prior qtr. | 55 | 56 | 49 | |||
| % Benefits | 11/2005 | 35 | 26 | 33 | ||
| Prior qtr. | 30 | 28 | 35 | |||
| Minn. | Iowa | Wis. | ||||
| Productivity | ||||||
| Upgraded technology/processes (last three months) | ||||||
| % "Yes" | 11/2005 | 44 | 40 | 45 | ||
| Prior qtr. | 45 | 38 | 41 | |||
| Made capital expenditure(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 48 | 44 | 44 | ||
| Prior qtr. | 46 | 43 | 45 | |||
| Made expenditure to train employee(s) (last three months) | ||||||
| % "Yes" | 11/2005 | 48 | 37 | 44 | ||
| Prior qtr. | 42 | 40 | 44 | |||
| Capacity utilization - can increase sales 10% without new inputs | ||||||
| % "Yes" | 11/2005 | 55 | 54 | 51 | ||
| Prior qtr. | 55 | 52 | 54 | |||
| Credit availability (last three months) | ||||||
| % All credit needs satisfied | 11/2005 | 43 | 50 | 45 | ||
| Prior qtr. | 41 | 41 | 43 | |||
| % All credit needs not satisfied | 11/2005 | 6 | 7 | 9 | ||
| Prior qtr. | 6 | 6 | 6 | |||
| % No credit needs | 11/2005 | 47 | 39 | 42 | ||
| Prior qtr. | 47 | 47 | 48 | |||
| Minn. | Iowa | Wis. | ||||
| Prices | ||||||
| Purchasing prices (last three months) | ||||||
| Net % increased | 11/2005 | 68 | 69 | 63 | ||
| Prior qtr. | 59 | 59 | 63 | |||
| Selling prices (last three months) | ||||||
| Net % increased | 11/2005 | 22 | 23 | 21 | ||
| Prior qtr. | 16 | 15 | 22 | |||
| Miscellaneous | ||||||
| Involvement in start of another business | ||||||
| % "Yes" | 11/2005 | 11 | 11 | 11 | ||
| Prior qtr. | 10 | 9 | 9 | |||
| Single most important business problem | ||||||
| % Weak sales | 11/2005 | 11 | 8 | 10 | ||
| Prior qtr. | 14 | 9 | 11 | |||
| % Taxes | 11/2005 | 7 | 11 | 9 | ||
| Prior qtr. | 9 | 10 | 12 | |||
| % Employee quality/costs | 11/2005 | 10 | 9 | 8 | ||
| Prior qtr. | 9 | 8 | 9 | |||
| % Insurance | 11/2005 | 15 | 19 | 23 | ||
| Prior qtr. | 17 | 20 | 20 | |||
| % Big-business competition | 11/2005 | 18 | 14 | 17 | ||
| Prior qtr. | 13 | 18 | 13 | |||
| % Inflation/Rising prices | 11/2005 | 17 | 15 | 14 | ||
| Prior qtr. | 14 | 11 | 12 | |||
| % Credit availability/Interest rates | 11/2005 | 3 | 3 | 1 | ||
| Prior qtr. | 3 | 2 | 1 | |||
| % Regulations/Red tape | 11/2005 | 7 | 8 | 7 | ||
| Prior qtr. | 6 | 9 | 8 | |||
| Minnesota Quarterly Spotlight | |
| Which of your total costs are rising most rapidly? | |
| Energy | 31% |
| Labor | 12% |
| Insurance | 26% |
| Materials | 24% |
| Some other | 3% |
| None rising rapidly | 2% |
| Don't know/Refused | 3% |
| Total | 100% |
| Which of your total costs are rising next most rapidly? | |
| Energy | 24% |
| Labor | 15% |
| Insurance | 28% |
| Materials | 26% |
| Some other | 4% |
| None rising rapidly | 2% |
| Don't know/Refused | 2% |
| 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.
