RSM Middle Market Business Index Surges to 138.5
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.
Despite elevated inflation and two consecutive declines in quarterly GDP in the first half of 2022, business conditions in the middle market remain solid. This is reflected in the Q3 2022 RSM US Middle Market Business Index (MMBI), which showed topline sentiment increased to 138.5 in the third quarter – up 7.3 points from the previous quarter.
The survey results were released in a report that details how businesses are responding to and perceiving inflationary pressures and economic conditions. It also highlights what they're expecting in the months ahead.
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.
Click here to download the survey.
Key findings from the report include:
- 48% percent of the surveyed middle market executives said gross revenues increased in the current quarter, while 60% stated they expect them to improve over the next six months.
- Half of the survey participants also stated net earnings improved in the third quarter, with 59% indicating they expect improvement in the near term.
- 30% of survey respondents stated that the economy improved in the current quarter and 39% expect it to improve over the next six months.
- More than seven in ten survey respondents reported increasing their prices, the highest in the history of the MMBI. Only 7% of respondents said they had difficulty passing along price increases.
- Reaching a record high, two in three survey respondents reported increasing employee compensation in the current quarter.
- 58% reported an increase in staff over the last three months, the highest share on record.
- 48% of executives said their organizations increased inventories during the third quarter, and 55% percent indicated they plan to do so in the near term.
SOURCE: RSM
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