NCMM: Mid-Market Impact on Recovery Continues, May Slow
According to the National Center for the Middle Market (NCMM), the middle market has been a shining light in this recovery to date with revenue growth rates typically well above 5%. But the data for Q3 suggests that growth is tapering off. The rate of growth of revenues for the past 12 months was 5.5%. Unfortunately, the latest survey from the NCMM shows that the expected rate of growth of revenues in the middle market is only 4.4% for the upcoming year.
When it comes to job creation, the good news is employment grew at a stable rate of 2.8% in Q3. What is less reassuring, however, is that executives predict slower employment growth of 2.1% in the year ahead. The percentage of middle-market executives willing to invest an extra dollar, a figure that had been increasing for the previous six quarters, has now dipped from 64% for Q2 to 61% in Q3. Not a large change, but significant because of change in direction. Similarly, the percentage of middle market managers expressing some confidence in the local/regional economy, the main hub of operations for middle market firms, has dipped from 79% in Q2 to 77% in Q3. Altogether, the middle market, thus far an engine of growth in the economy, seems to be “peaking out.”
In a cross-sectional comparison, the middle market is doing well relative to other segments. But in an intertemporal comparison, its growth has hit a plateau. Instead of its intended role as a facilitator, government seems to be instead playing the role of spoiler in this case, at a time when the unemployment rate is still hovering around 7.3%, the NCMM said.
The NCMM is a partnership between The Ohio State University’s Fisher College of Business and GE Capital.
To read the full NCMM news release click here.
To download the NCMM’s Q3/2013 Middle Market Indicator click here.