The nation’s nearly 200,000 middle market companies plan to hire 1.4
million new workers over the next 12 months, which is half a million
more jobs than projected at the beginning of 2014. According to the National
Center for the Middle Market’s (NCMM) latest quarterly Middle
Market Indicator (MMI), this resurgence in hiring is being fueled in
part by less uncertainty originating in Washington, enabling mid-market
executives to shift their focus toward attracting skilled talent,
addressing wage pressures, and accessing capital. Based on the latest MMI
growth projections, the NCMM
estimates middle market firms (with annual revenues between $10 million
and $1 billion) will create 59 percent of all new jobs in 2014.
“These findings confirm that mid-sized companies are the unsung heroes
of American business,” said Tom Stewart, Executive Director for the NCMM,
a collaboration between The Ohio State University Fisher College of
Business and GE Capital. “Growing faster than S&P 500 companies and
creating more jobs than their small and large business peers, the middle
market is a critical factor in stabilizing and growing the U.S.
economy.” Mid-sized firms represent only three percent of all American
businesses, yet contribute one-third of private GDP and employ one-third
of private U.S. workers.
Performance gains accelerating
According to the latest MMI
survey of 1,000 middle market executives, strong employment and revenue
performance are driving increased confidence and growth projections for
the year ahead. Revenue growth over the past 12 months was 6.5 percent,
which represents a 1.5 point increase over last quarter’s results and is
significantly higher than the S&P 500’s growth rate of just 0.5 percent
during the same time period.
Mid-market executives also report a 1.2 point gain in employment growth
over last quarter, to 3.7 percent. By comparison, small and large
companies grew employment at 2.1 percent and 2.6 percent respectively,
according to the ADP Jobs Report. Lower middle market firms (with annual
revenues between $10 million and $50 million) report particularly
notable employment growth, from 2.2 percent last quarter to 3.6 percent
this quarter.
Optimism for 2014
Confidence among mid-market executives is increasing alongside
accelerating gains in revenue and employment growth. In its ninth
edition, the MMI
finds that confidence in local economies reached an all-time record at
81 percent, while national and global confidence at 64 percent and 57
percent, respectively, are significantly higher compared to the same
time last year.
Executives’ growth projections for the year ahead give reason for
optimism as well. Mid-sized firms are projecting 4.5 percent revenue
growth for the next 12-month period, a modest increase over last
quarter’s projection at 4.3 percent. When it comes to job creation,
middle market companies project growth at 3.2 percent, which is a full
percentage point higher than last quarter.
What’s more, nearly two out of three mid-market executives plan to
invest in their businesses. Forty-eight percent of mid-sized
firms expect to introduce a new product or service, and 23 percent plan
to add a new plant or facility.
Stewart said, “The middle market’s encouraging projections for 2014
continue their trend of robust growth. Year after year, mid-sized firms
increase revenue projections and hit their targets, showing how strong
these companies are.”
Shifting views on Washington
Middle market executives have consistently cited government uncertainty
and health care costs as top concerns, with 34 percent and 46 percent,
respectively, citing them as highly challenging this quarter. While
still big numbers, these challenges have declined double-digit compared
to last year.
Instead, middle market firms are confronting challenges associated with
business expansion rather than issues arising from Washington politics.
For example, 75 percent of mid-market executives identified the ability
to attract, train and retain talent as highly or somewhat challenging.
In addition, more than half of surveyed executives identified access to
capital and labor difficulties as barriers to future growth.
At the same time, DC is also taking a greater interest in the importance
of middle market firms. “We are encouraged by the formation of the
Congressional Caucus for Middle Market Growth, recently announced by
Congressmen Steve Stivers, Jared Polis, Tom Rice and Brad Schneider,”
said Stewart. “This critical initiative serves the dual purpose of
recognizing the role of the middle market in catalyzing growth
nationwide and providing a policy platform in the halls of Congress to
discuss the needs of this sector going forward.”
About the Middle Market Indicator
The MMI
surveys 1,000 executives (CEOs, CFOs, and other C-Suite executives) from
the middle market's nearly 200,000 companies, focusing on their business
capabilities and performance, growth drivers, and economic outlook. This
quarter’s MMI
was fielded March 10 to 20, 2014. It is weighted to accurately reflect
the size and geographic distribution of this sector, which includes
companies with revenues between $10 million and $1 billion.
The quarterly MMI
tracks responses on the following topics: Gross revenues performance;
Overall company performance; Employment performance; Expected 12-month
gross revenue and employment growth; Confidence in the global, U.S. and
local economy; Key business challenges; Top areas for investment
dollars; Perceptions on topical issues and challenges relevant to the
U.S. middle market.
The survey is conducted by the independent research firm RTi on behalf
of the NCMM.
About the National Center for the Middle Market
The National
Center for the Middle Market (NCMM) was founded in 2011 in
partnership with GE Capital and is located at The Ohio State University
Fisher College of Business. The Center is the nation’s leading research
institution dedicated to helping middle market companies be more
competitive through impactful research, thoughtful advocacy, and
educational programs. To learn more about the Center or the MMI,
visit www.middlemarketcenter.org.
Copyright Business Wire 2014