7/19/2013 | Doug Farren

After a better-than-expected 2012, middle market companies are beginning 2013 as the spearhead of the nation's economic recovery.

Middle market companies, defined as those with annual revenue between $10 million and $1 billion, are poised to add an estimated $520 billion in new revenues and 1 million in new jobs this year, according to the latest Middle Market Indicator (MMI) survey from the National Center for the Middle Market.

The quarterly MMI, a report compiled from the surveyed responses of 1,000 U.S. middle market leaders across multiple industries, offers a look at the health and outlook of mid-sized companies in the U.S.

The Q4 2012 MMI, which was conducted in December, found that U.S. middle market businesses grew revenues at an average rate of 7 percent for the past 12 months, surpassing revenue-growth expectations throughout the year.

Additionally, middle market firms added an estimated 1.17 million jobs in 2012 based on a reported growth in employment of 2.7 percent, or 1 million new jobs.

Bolstered by their 2012 performances, middle market companies are beginning 2013 with an attitude best described as "cautious optimism."  They are more confident in the U.S. economy than the global marketplace.

All sectors (construction, financial services/businesses, healthcare, retail trade, services and wholesale trade) but one (manufacturing) anticipate gains this year. Manufacturing leaders predicted no growth while retailers forecast the biggest revenue increases.

That increased performance and sunnier forecast is translating into investment as well as jobs. After largely sitting on cash for several years, 59 percent of respondents said they would invest extra money instead of holding it in reserve, up from 56 percent in the third quarter. Among the largest middle market companies, the most commonly cited use of cash was to make acquisitions while smaller middle market companies said they planned to use the money for technology and capital expenditures.

Of course, problems remain. Middle market companies are coming to grips with the costs and challenges of healthcare reform and government regulations while facing uncertainty about government actions and passing on commodity costs.

The first quarter of this year has been marked by lukewarm economic news and more political gridlock in Washington. Whether that affects the upward trends will be found in the Q1 2013 MMI, which will be released in April.

Download the Q4 2012 Middle Market Indicator.