The fourth quarter (Q4) Middle Market Indicator (MMI) also shows that growth in year-over-year middle-market hiring doubled between Q4 2013 and Q4 2014. Middle-market firms created 2.3 million jobs last year, as employment grew for the year at a rate of 5%. The middle market is projected to create 64% of all new jobs in 2015.
For 2015, middle-market executives are estimating 6% revenue growth and 4% employment growth – the highest they have projected in the three year history of the MMI. Confidence in the local and national economies has never been higher, despite lagging confidence in the global economy. This is evident with 81% of middle-market executives expressing some level of confidence in their local economy compared to 73% for the national economy and 53% for the global economy.
"The middle market really hit its stride in 2014 and its projections for 2015 are the highest we've seen," said Thomas A. Stewart, Executive Director for the National Center for the Middle Market, a collaboration between GE Capital and The Ohio State University Fisher College of Business. "The numbers tell us that the middle market has been leading the US recovery and jobs growth, and is poised to invest heavily to sustain the momentum. State and Federal governments can do a number of things to support that effort."
Middle-market executives have identified several areas where they want Congress and the President to act, including infrastructure and tax reform. They rated tax reform, specifically a lower rate and a simplified code, the single most important policy issue for the federal government in 2014. Of all middle-market executives, 69% said tax reform was either very or extremely important for Congress and the President to tackle.
In addition, 91% of middle-market executives said it's important that the federal government focus on improving America's infrastructure and 44% said they're willing to pay more taxes to fund that investment.
And 76% of the executives said it was important for the government to take steps to expand international trade and exports. Correspondingly, 23% of middle-market executives indicated plans to expand into new international markets and 68% say they are more likely to invest additional cash on-hand than save – the highest proportion the survey has ever shown.
While confidence among middle-market companies is strong, they have identified several challenges to watch over the next year. Specifically, 88% of respondents considered the cost of healthcare either somewhat or highly challenging, which was the most commonly identified challenge for middle-market businesses. Additionally, the ability to attract, train, and retain talent became more of a concern in the fourth quarter with 77% of middle market executives considering it challenging.
About the Middle Market Indicator
The MMI surveys 1,000 executives (CEOs, CFOs, and other C-Suite executives) from the middle market's nearly 200,000 companies, focusing on their business capabilities and performance, growth drivers, and economic outlook. This quarter's MMI was fielded Dec. 2 to 12, 2014. It is weighted to accurately reflect the size and geographic distribution of this sector, which includes companies with revenues between $10 million and $1 billion.
The quarterly MMI tracks responses on the following topics: Gross revenues performance; Overall company performance; Employment performance; Expected 12-month gross revenue and employment growth; Confidence in the global, U.S. and local economies; Key business challenges; Top areas for investment dollars; Perceptions on topical issues and challenges relevant to the U.S. middle market.
The survey is conducted by the independent research firm RTi on behalf of the NCMM.
About the National Center for the Middle Market
The National Center for the Middle Market (NCMM) was founded in 2011 in partnership with GE Capital and is located at The Ohio State University Fisher College of Business. The Center is the nation's leading research institution dedicated to helping middle-market companies be more competitive through impactful research, thoughtful advocacy, and educational programs. To learn more about the Center or the MMI, visit www.middlemarketcenter.org.