United States

RSM US Middle Market Business Index

Middle market sentiment tumbles sharply in first quarter


The RSM US Middle Market Business Index tumbled in the first quarter to 124.1 from 132. The decline in both current conditions and the expected outlook for the economy and capital expenditures should be interpreted by policymakers as a signal that the “uncertainty tax” generated by the direction of U.S. trade policy and recent volatility in financial markets has spilled over into the real economy.

While we are not suggesting that an end to the current business cycle—which is approaching the longest-running economic expansion in post-World War II U.S. history—is imminent, but the probability of one has increased due to the uncertainty that lingers in the economy.

Despite the souring economic outlook and modest deterioration in revenues and profits during the current quarter, middle market businesses expect improvement in the next six months with 62 percent expecting revenues to increase and 60 percent anticipating a rise in net earnings.

Hiring, compensation and lending

The weakness in economic and financial difficulties that spilled over into the first quarter of the year has also influenced hiring and compensation conditions. Only 39 percent of middle market businesses indicated they increased hiring in the first three months of the year and 50 percent stated they expected to increase it during the next two quarters.

Compensation held up better than hiring, with 52 percent of executives indicating they increased compensation in the current quarter, and 59 percent stating they intend to do so going forward.

Current inventory and the expected buildup of stocks also slowed relative to the previous quarter. Prices paid and prices received were relatively unchanged, with the exception of the 53 percent of participants who stated they expect to increase prices during the next six months relative to the 61 percent who previously reported they expected to do so in the final quarter of 2018.

Download the first quarter report

MMBI highlights

General economy performance

Thirty-two percent of executives reported they believe the general economy has improved in the current quarter, a significant drop since the last quarter (48 percent). Forty-five percent indicated they expect the economy to improve in the next six months, a significant drop over last quarter (52 percent).


Gross revenue performance

Forty-three percent of executives reported gross revenues increased in the current quarter, a significant drop over last quarter (55 percent). Similar to the previous quarter, 62 percent expect revenues to increase in the next six months. 

Net earnings performance

Forty-seven percent of middle market executives reported net earnings increased in the current quarter, a significant drop over last quarter (58 percent). 


Download the full first quarter 2019 report

RSM US LLP and The Harris Poll have collected data on middle market firms from quarterly surveys that began in the first quarter of 2015. The survey is conducted four times a year, in the first month of each quarter: January, April, July and October. The survey panel, the Middle Market Leadership Council, consists of 700 middle market executives, and is designed to accurately reflect conditions in the middle market.

The data for each quarter are weighted to ensure that they correspond to the U.S. Census Bureau data on the basis of industry representation. A reading above 100 for the MMBI indicates that the middle market is generally expanding; below 100 indicates that it is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction. Read more about how the index is constructed. 


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