United States

RSM US Middle Market Business Index Sees Modest Jump in September, as Pandemic Conditions Continue to Ease

The September data indicates the middle market remains on track for recovery, but hiring and capital investments continue to lag



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 September 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 modest increase from 124.9 in August to 128.0 in September, indicating the middle market has regained its strength following the reopening of the economy and anticipates continued improvement in the months ahead. 

The September results imply that the middle market remains on an upward trajectory after a sharp rebound in August, with executives reporting their highest levels of confidence in economic and financial conditions since the first quarter of 2020. Fifty-two percent of respondents stated the economy improved in September, and 68% expect continued growth over the next six months. This optimism is reflected in executives’ expectations for revenues and earnings, with roughly 64% of respondents expecting strong gross revenues and 63% anticipating an improved earnings environment through the first quarter of 2021.


“A palpable sense of relief has swept the middle market, as demand has returned and supply chain disruptions associated with the pandemic have eased,” said Joe Brusuelas, chief economist, RSM US LLP. “That being said, the low-hanging fruit in terms of the recovery has all been picked, and one should anticipate moderation in any further improvement. Our model of the pandemic implies that infections are again on an upswing, and should infections begin to move back toward their summer 2020 peak, there will likely be a slowing in overall economic activity and an easing in middle market sentiment.”

While improvements in the economy underscore the middle market’s optimistic outlook, firms project a much more cautious position with respect to hiring, compensation and capital investments. Only 38% of executives noted an improvement in hiring in September, and 54% intend to boost hiring over the next six months. In addition, just 42% reported a willingness to increase compensation to support current hiring. Capital investments remain weak, with only 37% of respondents noting an increase in September and 51% expecting heightened spending through the first quarter of 2021. Given the decline in gross revenues and earnings during the pandemic, middle market firms continue to pull back on all non-essential outlays, while managing hiring, compensation and fixed business investment carefully.

Other notable findings for the September MMBI include a rise in pricing conditions, with 60% of respondents observing an increase in prices paid and 64% expecting sustainment of that trend. Additionally, inventory management has remained paramount, with only 40% of respondents stating they increased inventories in September and 54% expecting to do so in the next six months. This implies that business leaders are preparing for a weak holiday spending season, as middle market firms have historically started shoring up inventories around this time in years past, in anticipation of holiday-induced demand.

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 September MMBI data was collected between September 10 and September 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 51,000 people across 123 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.