The data, which has been seasonally adjusted, is based on responses from 404 senior executives at middle market firms in a survey conducted by The Harris Poll from July 14 to Aug. 4.
Key takeaways
The MMBI fell to 122.5 in Q3, down modestly from 124.2 in the previous quarter.
Two-thirds of survey respondents reported an increase in prices paid for goods and services this quarter.
Sixty-two percent of respondents expect to raise prices, which could lead to increasing customer costs.
The Middle Market Business Index is created in partnership with the U.S. Chamber of Commerce.
Economic and policy uncertainty continue to hang heavily over economic prospects for middle market businesses heading into the critical holiday season that marks the final quarter of 2025.
Firms grew slightly more pessimistic in the third quarter despite relief that lies ahead in 2026 due to pro-growth expansionary fiscal policy.
That general uncertainty resulted in a modest decline in sentiment from 124.2 to 122.5 in the RSM US Middle Market Business Index. Both figures stand below the four-quarter moving average of 130.5.
Middle market firms appear to be absorbing an increase in prices paid, and face a limited ability to pass those costs along downstream, the data underlying the topline index strongly suggests. This implies narrowing profit margins as the rising cost of goods, driven by trade policy, sets the stage for a challenging conclusion to 2025.
Sixty-seven percent of survey participants reported an increase in prices paid for goods and services in the third quarter of 2025, while the same percentage also expect to pay higher prices into 2026.
Only 48% of respondents indicated that the prices their organization received for all of its goods and services this quarter versus last quarter increased, down from 56% previously. However, 62% of respondents expect to raise prices. RSM believes organizations will pass along these increased costs to consumers, which could contribute to rising inflation pressures into the next year.
The average U.S. tariff rate at the time of publication is 9.75%—up from the 25-year average of 1.4%—and we expect it to move towards 18% over the next two months based on the public tariff schedule.
This suggests thinning profit margins will drive the economic narrative for middle market firms until a sense of certainty regarding trade and policy is restored.
Inventory management, during what has been a volatile year at the ports due to rising trade taxes, is clearly a concern among middle market businesses that pulled forward goods orders in late 2024 and during the first three months of this year to avoid rising tariffs.
As one would expect, inventory accumulation slowed during the third quarter; only 35% of respondents said they increased stock on hand, while 44% indicated they intend to do so over the next six months.
With the public tariff schedule signaling sharp price increases ahead for raw and intermediate goods, inventory issues and a potential price shock may be in store for the holiday season.
Middle market views on the economy remain somewhat sour as a result, with only 37% of respondents stating that the economy improved during the third quarter.
However, 50% said they expect improvement over the next six months since a tax cut is on the way.
Gross revenues and net earnings also remained somewhat challenged. Thirty-nine percent of respondents said revenues improved during the current quarter, while 43% said net earnings rose.
Over the next six months, commensurate with next year’s pro-growth tax policy, 58% of respondents expect revenues to increase and 60% expect net earnings to improve.
Capital expenditures in the current quarter appeared to have slowed. Only 38% of respondents noted that they increased outlays on productivity—enhancing software, equipment and intellectual property, whereas 50% said they intend to do so over the next six months.
Middle market businesses, like their large and small counterparts, have clearly slowed the pace of hiring. Thirty-four percent said they increased hiring in the current quarter, while 46% said they will do so over the next half a year.
Not surprisingly, 43% said they increased compensation to attract labor in the third quarter, compared to 54% who think they will need to do so in the near term.
The percentages reporting an increase in borrowing in the current quarter and over the next six months remained relatively stable, at 26% and 32%, respectively.
It is clear that the benefits from the recent enactment of the tax bill—greater certainty and reduction in the after-tax costs of capital investments—are being eroded by tariffs and greater than usual policy and economic uncertainty. For our economy to reach its full potential, it is critical that we reduce the tariff burden, continue to reduce regulatory and permitting costs, and address persistent labor constraints.
Neil Bradley, Executive Vice President and Chief Policy Officer, U.S. Chamber of Commerce
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Recoded Sept. 23, 2025
General economy
Gross revenues
Net earnings performance
Capital expenditures
Overall hiring
Employee compensation
Access to credit
Planned borrowing
Amount paid for goods
Amount received for goods
Inventory levels
To refer to the percentages in the subindex items, access the PDF.
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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.
Middle market organizations, which make up the real economy, are too big to be small and too small to be big. They are the backbone of the broader economy, yet they often fly under the public radar. They have distinct challenges and opportunities around financing, material resources, labor, technology, innovation, regulation and other issues. The MMBI breaks new ground by capturing the distinct sentiment of this important subset of the U.S. economy.
RSM US LLP and The Harris Poll have collected data on middle market firms from a quarterly survey 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 Middle Market Leadership Council, our survey panel, consists of approximately 1,600 middle market executives, and is designed to accurately reflect conditions in the middle market. The data is weighted to ensure that it corresponds to U.S. Census Bureau data on the basis of industry representation.
An index reading above 100 indicates that the middle market is generally expanding; a reading below 100 shows that the middle market is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction.
The MMBI survey is conducted four times a year. It is based on a subset of questions that ask middle market executives to report the change in a variety of indicators ranging from their organizations’ earnings to hiring levels and prices paid for goods and services.
The MMBI is a composite index computed as an equally weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep results from becoming negative. The index is designed to capture views on both current and future conditions; it includes five questions on middle market executives' recent experiences and five on their expectations for the future.
The survey panel, the MMBI Leadership Council, consists of approximately 1,600 middle market executives across a broad array of industries, and is designed to accurately reflect conditions in the middle market.
RSM US LLP and The Harris Poll have collected data on middle market organizations using quarterly surveys, which began in the first quarter of 2015. The MMBI survey is typically conducted four times a year, in the first month of each calendar quarter: January, April, July and October.
- What are your expectations regarding the general economy?
- What are your expectations regarding your organization’s gross revenues?
- How would you describe the level of your organization’s most recent quarter net earnings results?
- What are your expectations regarding your organization’s aggregate capital expenditures or investments?
- What are your expectations regarding your organization’s overall hiring levels?
- How would you describe your organization’s current employee compensation level on average?
- How would you describe current access to credit?
- What are your expectations regarding your organization’s planned borrowing?
- How would you describe the current general level of prices received?
- What are your expectations regarding your organization’s planned inventory levels?
With a backlog of research for nearly 10 years, each question in the MMBI index is now seasonally adjusted using the Census X-13 method in order to remove periodic fluctuations associated with recurring calendar-related events. Seasonally adjusted values for questions make it easier to observe underlying fundamental changes, particularly those associated with economic expansions and contractions.
For this adjustment, the "increase" and "decrease" percentage components of each index question will be tested for seasonality separately and adjusted accordingly if such patterns exist. If no seasonality is detected, the component will be left unadjusted.
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