1Q 2012 Middle Market Indicator

Despite challenges, middle market firms continue to hire new workers and perform during a crucial moment for U.S. economic growth. Employment and revenue growth continue to outpace average national growth. With average revenue growth over the past 12 months of 5.8%, the middle market continues to show robust growth. In an economy that overall experienced a mere 0.4% GDP growth in the fourth quarter of 2012, the growth of the middle market is nothing short of remarkable.

 
 

Other Key Findings:

Middle market companies continue to grow

Revenue continues to grow with 63% of firms saying that gross revenue grew during the past 12 months. That’s down slightly from the fourth quarter of 2012. The mean revenue growth fell to 5.8%, with most of the decline coming from the largest middle market companies. Companies also expect performance in the coming year to be better with 64% projecting revenue to grow, although at a slightly lower average of 4.9% than the 5.2% average at the end of the fourth quarter.

Confidence in the economy is a notable concern

As businesses look beyond their local economies, their confidence levels deteriorate. Only 15% of middle market businesses are confident in the U. S. economy, only 7% are confident in the global economy, yet 28% are confident in their local economy.

Firms are cautious about future investment

Among middle market executives, 41% said they would save extra cash, either to bolster cash reserves or to make future investments. The remainder would reinvest either for capital expenditures (20%), technology (14%), acquisitions (11%), HR/hiring (11%), or other (3%).

Policy and regulation post critical challenges

More than half (52%) of middle market companies see the regulatory environment as more restrictive than previously, with only 4% indicating it is less restrictive. Middle market companies cited four major challenges as more intense than others; reported as highly or somewhat challenging were: the cost of health care (92%), uncertainty over how government actions will impact business (81%), the ability to maintain profit margins (86%), and ensuring compliance with new regulations (69%).

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