United States

RSM US Middle Market Business Index Rebounds in August, Nearing Pre-Pandemic Levels

The August data indicates a surge in confidence among business leaders, but policy attention is required for sustainment



RSM US LLP (RSM) – the nation’s leading provider of audit, tax and consulting services focused on the middle market – today announced results of the August reading for its RSM US Middle Market Business Index (MMBI). Typically a quarterly index, the firm is releasing monthly installments of the MMBI for the duration of the COVID-19 pandemic. Today’s data revealed the MMBI composite score saw a sharp increase from 101 in July to 124.7 in August – the highest score since the index hit 131.8 in the first quarter of 2020 – indicating the middle market has entered an initial phase of recovery and is optimistic for the months ahead.

Following a challenging five months in distress, this month’s results imply that middle market business leaders have regained confidence as overall economic activity stabilized in August and pandemic conditions began to ease. Forty-seven percent of respondents stated the economy improved in August, and 66% expect continued growth over the next six months. This optimism is reflected in executives’ expectations for revenues and earnings, with roughly 60% of respondents expecting strong gross revenues and 64% anticipating an improved earnings environment in the next six months. These findings reveal a significant jump from July’s results, likely linked to the modest pace of business reopenings across the economy and hopes for a workable vaccine by early 2021.


“The uptick in confidence surrounding the economy, revenues and earnings tells us the middle market is beginning to recover from the economic crisis and can expect sustained momentum over the next two quarters, barring the need for additional business closures or lockdowns,” said Joe Brusuelas, chief economist with RSM US LLP. “However, given the probable damage to small firms wrought by the pandemic, policy attention will need to be given to the supply side of the economy to stimulate hiring and productivity gains in the coming years to return to pre-pandemic economic levels.”

While the August results are promising, challenges will remain as COVID-19 cases continue to surge in parts of the country and businesses vie for sustained aid from policymakers. Only 38% of respondents noted an increase in capital expenditures in August, and less than half (47%) expect to boost spending over the next six months. With 46% of executives reporting that hiring had improved in August and 54% expecting they would do so by the middle of the first quarter in 2021, the current outlook on hiring reflects the restrained level of output in the current quarter.

Other notable findings for the August MMBI include a positive outlook on pricing conditions, with roughly 41% of respondents observing an improvement in prices received and 53% expecting sustainment of that trend. While 59% of respondents faced rising prices in August and 64% expect to do so over the next six months, this is to be expected given the general decline in prices that followed the onset of the pandemic in early 2020. Inflation does not pose a risk to the economy in the near to medium term.

RSM will continue to publish monthly installments of the MMBI for the extent of the COVID-19 pandemic. To stay informed with the latest insights, ideas and countermeasures to minimize the outbreak’s negative effects as well as prepare for future emergency events, visit RSM’s COVID-19 Resource Center. It also includes information about the $600 billion Main Street Lending Program and related measures from the federal government that are meant to stem the fallout from this global health crisis.

The August MMBI data was collected between August 10 and August 24, 2020.  

About the RSM US Middle Market Business Index
RSM US LLP and the U.S. Chamber of Commerce have partnered to present the RSM US Middle Market Business Index (MMBI). It is based on research of middle market firms conducted by Harris Poll, which 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 consists of 700 middle market executives and is designed to accurately reflect conditions in the middle market.

Built in collaboration with Moody’s Analytics, the MMBI is borne out of the subset of questions in the survey that ask respondents to report the change in a variety of indicators. Respondents are asked a total of 20 questions patterned after those in other qualitative business surveys, such as those from the Institute of Supply Management and National Federation of Independent Businesses.

The 20 questions relate to changes in various measures of their business, such as revenues, profits, capital expenditures, hiring, employee compensation, prices paid, prices received and inventories. There are also questions that pertain to the economy and outlook, as well as to credit availability and borrowing. For 10 of the questions, respondents are asked to report the change from the previous quarter; for the other 10 they are asked to state the likely direction of these same indicators six months ahead.

The responses to each question are reported as diffusion indexes. The MMBI is a composite index computed as an equal weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep the MMBI from becoming negative. 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.  

RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.

RSM US LLP is the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with 48,000 people across 120 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.