RSM US MMBI

Q3 2022 Middle Market Business Index

The index surges to 138.5 despite elevated inflation.

Sep 07, 2022

Business conditions in the American real economy imply no recession in the third quarter as the middle market remains on a path for growth, even as the market grapples with elevated inflation.

Top-line sentiment among executives of midsize companies improved to a seasonally adjusted index reading of 138.5, up 7.3 points from the second quarter. That change is significant at both the 0.10 and 0.05 levels. An economy displaying such a robust reading, along with business conditions that have produced 3.4 million jobs over the first seven months of the year and unemployment of 3.5%, is not consistent with a recession.

RSM US Middle Market Business Index Q3 2022

General economy

General economy performance

Forty-six percent of respondents said the economy worsened during the third quarter, up from 41% in the prior period.

MMBI Q3 2022 general economy performance line chart
Gross revenues

Gross revenues performance

Gross revenues were up at 48% of respondents' companies in Q3, a four-point gain from Q2. Sixty percent see gross revenues improving over the next six months.

MMBI Q3 2022 gross revenues performance line chart
MMBI Q3 2022 gross revenues performance
Net earnings performance

Net earnings performance

Net earnings in the third quarter were higher at half of companies represented in the MMBI, up from 42% in the second quarter.

MMBI Q3 2022 net earnings performance line chart
MMBI Q3 2022 net earnings performance
Investments performance

Aggregate capital expenditures/investments performance

Capital outlays eased slightly, with 41% of executives indicating their organizations made investments in Q3. The outlook remains relatively robust with 53% indicating that they will be making capital expenditures in the next six months.

MMBI Q3 2022 aggregate capital expenditures/investment performance line chart
MMBI Q3 2022 aggregate capital expenditures/investment performance
Overall hiring

Overall hiring levels

Those businesses hiring more workers rose sharply to 58% in the third quarter, from 47% in the prior period.

MMBI Q3 2022 overall hiring levels line chart
MMBI Q3 2022 overall hiring levels
Employee compensation

Employee compensation

Two-thirds of respondents said their businesses paid workers more in Q3, up from 62% in Q2; 72% said they expect to boost compensation over the next six months.

MMBI Q3 2022 employee compensation line chart
MMBI Q3 2022 employee compensation
Access to credit

Access to credit

Access to credit strengthened in Q3, with 37% of participants saying their companies found it easier to get loans, up sharply from 26% in Q2.

MMBI Q3 2022 access to credit line chart
MMBI Q3 2022 access to credit
Planned borrowing

Planned borrowing

Forty-one percent of respondents say their organizations will borrow more over the next six months, up from 34% in the prior polling period.

MMBI Q3 2022 planned borrowing line chart
MMBI Q3 2022 planned borrowing
Amount paid for goods

Amount paid for goods and services

A strong majority (83%) of MMBI respondents said they paid more for goods and services in Q3, up from 78% in Q2. Nearly the same amount expect to pay more over the next six months.

MMBI Q3 2022 amount paid for goods and services line chart
MMBI Q3 2022 amount paid for goods and services
Amount received for goods

Amount received for goods and services

Seventy-one percent of survey participants received more for their goods and services in Q3, up from 66% in Q2; this is an indication of their ability to pass higher input prices downstream.

MMBI Q3 2022 amount received for goods and services line chart
MMBI Q3 2022 amount received for goods and services
Inventory levels

Inventory levels

Of those companies with inventory, 48% said levels were higher in Q3, up from 39% in Q2. Fifty-five percent of those surveyed see their businesses stockpilling more goods over the next six months.

MMBI Q3 2022 inventory levels line chart
MMBI Q3 2022 inventory levels

General economy performance

Forty-six percent of respondents said the economy worsened during the third quarter, up from 41% in the prior period.

MMBI Q3 2022 general economy performance line chart

Gross revenues performance

Gross revenues were up at 48% of respondents' companies in Q3, a four-point gain from Q2. Sixty percent see gross revenues improving over the next six months.

MMBI Q3 2022 gross revenues performance line chart
MMBI Q3 2022 gross revenues performance

Net earnings performance

Net earnings in the third quarter were higher at half of companies represented in the MMBI, up from 42% in the second quarter.

MMBI Q3 2022 net earnings performance line chart
MMBI Q3 2022 net earnings performance

Aggregate capital expenditures/investments performance

Capital outlays eased slightly, with 41% of executives indicating their organizations made investments in Q3. The outlook remains relatively robust with 53% indicating that they will be making capital expenditures in the next six months.

MMBI Q3 2022 aggregate capital expenditures/investment performance line chart
MMBI Q3 2022 aggregate capital expenditures/investment performance

Overall hiring levels

Those businesses hiring more workers rose sharply to 58% in the third quarter, from 47% in the prior period.

MMBI Q3 2022 overall hiring levels line chart
MMBI Q3 2022 overall hiring levels

Employee compensation

Two-thirds of respondents said their businesses paid workers more in Q3, up from 62% in Q2; 72% said they expect to boost compensation over the next six months.

MMBI Q3 2022 employee compensation line chart
MMBI Q3 2022 employee compensation

Access to credit

Access to credit strengthened in Q3, with 37% of participants saying their companies found it easier to get loans, up sharply from 26% in Q2.

MMBI Q3 2022 access to credit line chart
MMBI Q3 2022 access to credit

Planned borrowing

Forty-one percent of respondents say their organizations will borrow more over the next six months, up from 34% in the prior polling period.

MMBI Q3 2022 planned borrowing line chart
MMBI Q3 2022 planned borrowing

Amount paid for goods and services

A strong majority (83%) of MMBI respondents said they paid more for goods and services in Q3, up from 78% in Q2. Nearly the same amount expect to pay more over the next six months.

MMBI Q3 2022 amount paid for goods and services line chart
MMBI Q3 2022 amount paid for goods and services

Amount received for goods and services

Seventy-one percent of survey participants received more for their goods and services in Q3, up from 66% in Q2; this is an indication of their ability to pass higher input prices downstream.

MMBI Q3 2022 amount received for goods and services line chart
MMBI Q3 2022 amount received for goods and services

Inventory levels

Of those companies with inventory, 48% said levels were higher in Q3, up from 39% in Q2. Fifty-five percent of those surveyed see their businesses stockpilling more goods over the next six months.

MMBI Q3 2022 inventory levels line chart
MMBI Q3 2022 inventory levels

Additional findings

A majority of survey respondents indicated they are passing along price increases.

notepad

Only 7%

of respondents said they had difficulty passing along increases.

notepad

Over 70%

the highest on record, reported hiking their average selling prices.


Responses around capital outlays are a continued source of optimism.

41%

of respondents increased productivity-enhancing capital expenditures.

53%

indicated they expect to do so over the next six months.

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ABOUT THE RSM US MIDDLE MARKET BUSINESS INDEX

In partnership with the U.S. Chamber of Commerce, we've collected data on middle market firms since 2015 through quarterly surveys conducted by The Harris Poll. 

The RSM US Middle Market Business Index provides a leading measure on the performance of businesses that make up the heart and soul of our country's economy.

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