While middle market businesses continue to grow, and to grow faster than their larger counterparts, year-over-year growth rates slowed for Q4 2015. Expectations for growth in 2016 remain stable relative to last quarter, but they continue to be muted, and the outlook for short-term sales and demand has declined.
The rate of growth remains healthy at 6.1%, however, it is more than one full percentage point lower than what was reported at the end of 2014. Half of middle market businesses say they will grow revenues in the coming year. Revenue projections for the next 12 months have remained around 4%--about the same as last quarter but significantly lower than projections six months ago.
Employment growth slows marginally
The proportion of firms increasing their workforce compared to one year ago has continued to decline slightly to 39%, compared to 42% last quarter. Looking forward, nearly one-third of middle market firms expect to grow the size of their workforce in the coming year.
Confidence is tapering off but remains strong nationally and locally
Since peaking in early 2015, confidence in the global, national, and local economies has declined throughout the year. Nationally and locally, confidence remains relatively high, with more than two-thirds (67%) of leaders expressing confidence in the national economy and upwards of three-quarters (76%) of leaders feeling optimistic about the local environment. However, confidence in both areas is waning.
Firms are less likely to invest
The proportion of middle market firms willing to invest extra money has declined since the end of 2014. Currently, six in 10 companies (61%) say they would allocate extra dollars toward investments while nearly four in 10 (39%) plan on keeping cash.
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