Accountants, architects, engineers and other professional services firms in the Upper Midwest did well over the past year and expect to continue to grow over the next twelve months, according to a recent survey of nearly 400 professional services firms conducted by the Federal Reserve Bank in Minneapolis and the Minnesota Department of Employment and Economic Development.
Results reveal growth in sales prices, revenue and productivity. Profits and employment grew slowly over the past twelve months due to higher input costs, such as supplies, transportation, equipment and space and lower availability of workers. Over the next four quarters, respondents expect expansion in all aspects of the businesses, although they do not plan to add office space. They also anticipate more jobs and higher profits in the overall economy but flat consumer spending and rising inflation.
Across the district, firm revenue increased during the last year, with 53 percent of respondents reporting higher sales revenues. The survey attributes the increase in revenues to higher sales prices and a slight increase in employment. Productivity also improved, with 43 percent of those surveyed reporting increases. Potentially limiting additional revenues were in the rising input costs reported by 64 percent of respondents.
Participants indicated that wages increased an average of 3.5 percent and benefits 3.4 percent. The result is slightly higher profits, with 43 percent of respondents noting increases.
The outlook for the next four quarters is strong and optimistic across the district. Only 17 percent of respondents expect decreases in sales revenues and just 7 percent expect decreases in productivity. In addition, respondents plan to raise prices further and add employees if they can find them in the current tight labor market. Input costs are expected to continue to increase and over half the respondents expect to continue to increase their bottom line.
The survey of randomly selected business service firms in Minnesota, Montana, North and South Dakota, northwestern Wisconsin and the Upper Peninsula of Michigan, was conducted in May and early June. It is the first of what is anticipated will become an annual poll.