Middle Market Indicator Q2 2012
New research from the National Center for the Middle Market (NCMM) reveals that year-over-year revenue growth for the middle market has slowed from 6.9% to 6.1%. While slowing growth and erosion of confidence in the global economy may are something to watch, some indicators of optimism remain.
Steady growth and hiring continues
Despite identifying headwinds related to regulation and the global economy, middle market companies continue to demonstrate their ability to grow and outperform both large and small businesses. The second quarterly Middle Market Indicator (MMI) shows that middle market businesses, with the 6.1% growth rate projection, continue to outpace S&P 500 revenue projections of 3.4%. In Q2, middle market companies also reported increased year-over-year job growth at 2.0% versus 1.0% for S&P 500 companies. Going forward, middle market companies expect their annual hiring to moderate to 1.8%.
Middle market firms more confident closer to home
The MMI found that respondents' mixed confidence in the global economy is causing mid-market companies to look for growth opportunities closer to home. Only 5% of companies expressed confidence in the global economy's prospects compared with 7% in Q1, and 12% are confident in the U.S. economy compared with 15% in the previous quarter. Similar to Q1, companies are more confident closer to home with 23% expressing confidence in their local economies. The number of companies indicating "no confidence" in the global economy increased dramatically from 32% in Q1 to 44% in Q2.
According to the Q2 MMI, mid-market companies are placing a greater emphasis on building a strong cash position. Middle market leaders report they are more likely to hold an extra dollar as cash, with 50% of executives reporting they would hold an extra dollar rather than invest it back into their businesses, versus 41% in the first quarter.
The second quarterly Middle Market Indicator (MMI) surveyed 1,000 CEOs, CFOs and other C-level executives representative of the U.S. middle market about the health and outlook of their businesses. With companies in the middle market ($10M to $1B in revenues) accounting of over a third of private employment and 33% of GDP, they are a major indicator of the health of the US economy.
The MMI is published in the fourth week of the month following the quarter. With no analysis previously available, the NCMM launched the MMI to provide insights and analysis on this critical component of the US economy. For more data from the Middle Market Indicator, including industry-specific findings, please visit the National Center for the Middle Market.