Middle Market Business Strengthens in the Second Quarter

The Center for the Middle Market at Ohio State University released their quarterly Middle Market Indicator for the second quarter of 2018. Overall, the report showed decidedly strong improvements across the middle market over the last quarter and year. 

• Middle-market business conditions saw overall improvement in the second quarter of 2018. Seventy-two percent of companies in the middle market reported performance improvements from one year prior. Leaders in the mid-market also expect a solid third quarter and healthy growth through the next 12 months. This improvement is marked by a 7.4% revenue growth for the trailing twelve months, which is well above the long-term average growth rate of 6.8% as recorded by the Center for the Middle Market. Businesses operating in the wholesale and retail industries report the sharpest declines in the rate of growth while companies in the manufacturing, healthcare, and services industries continue to experience increased growth.

• Other metrics saw sound improvements in the quarter. Middle market businesses are hiring at a significant clip. Fifty-seven percent of firms in the mid-market say they have larger workforces than one year ago. Overall, headcount in the middle market has grown 6.7% throughout the last twelve months. Construction, retail trade, financial services, and manufacturing businesses have staffed up most notably over the past 12 months. Furthermore, 71% of companies say they are willing to invest an extra dollar as opposed to saving it, an all-time high proportion for the Middle Market Indicator. For the second straight quarter, information technology is the most preferred sector for this investment.

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• Middle market confidence is also above average levels for the report. Ninety percent of firms are confident in their local economies, 86% of firms are confident in the national economy, and 75% are confident in the global economy. However, global economic confidence has slipped, falling from 82% a year ago, a result of trade tensions. Going forward, companies do not expect growth to slow down. Middle market businesses are anticipating 6.5% growth in revenues and 4.8% growth in workforce headcounts. Sixty-five percent of companies expect sales to grow in the next year. Business is excellent for most companies in the middle market amid the overall economic boom. However, trade spats with China and Europe and the resulting cost increases are concerning for 10% of middle market leaders. Companies are hoping to cope with these cost increases by selling more products and services, meaning they anticipate the economy will stay strong into the near-term future.