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Middle Market Confidence in U.S. Economy Reaches Record High in Q1 2017

April 27, 2017, 08:00 AM
Filed Under: Economic Commentary

Confidence in the U.S. economy among middle market companies has reached a new high in early 2017, according to the Q1 2017 Middle Market Indicator (MMI) released by the National Center for the Middle Market (NCMM). With nine in 10 middle market leaders indicating a positive perception of the country's economy, this level of confidence represents the highest recorded in the MMI's five-year history.

The increased confidence levels are not isolated just to the U.S. economy, with middle market companies' confidence in their local economies reaching a record high at 88 percent. The middle market's confidence in the global economy continues its dramatic ascent to 77 percent, up from 65 percent the previous quarter and 51 percent during the first quarter of 2016.
"The middle market is continuing to benefit from and contribute to the boost in local, national and global economic confidence that followed the 2016 elections," said NCMM Executive Director Thomas A. Stewart. "For this reason, we are likely to see increased domestic expansion and innovation, as well as sustained confidence, from many of these companies."

This high level of confidence is bolstered by year-over-year revenue growth from nearly three-quarters of all middle market companies. This contributes to a 9.2 percent year-over-year revenue growth rate for middle market companies, exceeding the five-year average of 6.6 percent and representing the highest rate ever recorded by the MMI. Furthermore, six out of 10 middle market leaders believe their companies will experience an increase in revenue growth over the next 12 months.

Hiring is also on the rise among middle market businesses, with more than half adding to their employment rosters in the past year. The entire middle market has witnessed a 7.5 percent year-over-year employment growth rate, an increase from the previous quarter by more than two percentage points. This past year's surge in merger and acquisition activity played a big part in this rise. Looking ahead, more than four out of 10 companies expect hiring increases over the next year.

"With impressive increases in revenue and employment growth, it's unsurprising that 70 percent of middle market leaders have reported improvement in overall company performance in the last year," said NCMM Managing Director Doug Farren. "As a result, we are going to see many companies expanding their services, launching new products and focusing on overall innovation."

Construction companies represent the clear industry standout throughout all major measurement indices of the MMI. Specifically, the middle market construction industry experienced a 20.5 percent year-over-year revenue growth rate in Q1 2017, nearly doubling its revenue growth rate from the previous quarter. The industry featured an employment growth rate of 16.6 percent, with about half of these companies expanding into new domestic markets, mainly due to mergers and acquisitions.

Challenges for the Middle Market
While middle market leaders anticipate growth in the coming year, the MMI has helped to identify a number of key challenges. Leaders are concerned about the changing nature of the marketplace, the impact of politics on regulations and trade and figuring out how to control health care costs. Chief among the internal challenges are figuring out how to efficiently maintain growth, including cash and inventory management, and finding and retaining qualified workers.

For additional survey data and infographics, including in-depth looks at regional variations, hiring/talent acquisition efforts and other business concerns among middle market companies, visit

The MMI, which was created in 2012, surveys 1,000 executives (CEOs, CFOs and other members of the C-Suite) from the middle market each quarter to examine topics related to business capabilities, performance, growth drivers and economic outlook among other topics. This quarter's MMI was fielded during the first two weeks of March 2017. It is weighted to accurately reflect the size, industry-wide and geographic distribution of this sector, which includes companies ranging from $10 million to $1 billion in annual revenue. The survey is conducted by RTi Research on behalf of the National Center for the Middle Market.

The National Center for the Middle Market is a collaboration between The Ohio State University's Fisher College of Business, SunTrust Banks and Grant Thornton LLP. It exists for a single purpose: to ensure that the vitality and robustness of Middle Market companies are fully realized as fundamental to our nation's economic outlook and prosperity. The Center is the leading source of knowledge, leadership, and innovative research on the middle market economy, providing critical data analysis, insights, and perspectives for companies, policymakers, and other key stakeholders, to help accelerate growth, increase competitiveness and create jobs in this sector.

Housed at The Ohio State University's Fisher College of Business, the National Center for the Middle Market is the first center of its kind in the nation. The Center enthusiastically serves middle market firms, students, academic researchers, policy makers, the media and other key stakeholders with interests in the health and well-being of the middle market. The Center is fully committed to funding and distributing the most credible open-sourced research, dynamically creating new knowledge, providing programs that drive value for middle market companies, and offering a well-informed outlook on the health and future of the middle market via the Middle Market Indicator.

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