1Q 2015 Middle Market Indicator

The Q1 2015 Middle Market Indicator survey represents the 13th consecutive query into the state and health of the U.S. middle market. Following a year of consistently accelerating revenue and employment growth for middle market firms, growth appears to be stabilizing in the first quarter of 2015. While revenue growth remains strong, employment growth has tapered off slightly. Looking forward, projections for future revenue growth and employment growth have become more conservative across all middle market revenue segments and most industries. Although global economic confidence remains muted, confidence in the local and U.S. economies continues to be strong.


Key Insights

For Q1 2015, seven in 10 middle market firms reported year-over-year increases in revenues, slightly fewer than last quarter, but up from 64% of firms reporting increases one year ago.

While the number of total firms reporting growth is slightly down, mean revenue growth is slightly up. At 7.4%, the growth rate is nearly one full percentage point higher than what firms reported in Q1 2014. Mean total growth expectations for the next 12 months have dropped from 6.0% last quarter to 5.3% today.

Employment continues to grow, but at a slower pace

While mean total employment growth for the past 12 months has declined somewhat since last quarter, it remains over 4%, well above levels reported during the first three quarters of 2014. About one-third of firms expect to hire in the next three months, and around four in 10 (39%) say they will hire over the next 12 months, down from 52% that reported employment growth intentions last quarter.

Global confidence to lag behind national and local confidence

Middle market leaders are clearly confident in their local economies and in the U.S. economy as a whole. Yet, attitudes toward the global economic scene continue to be weak in comparison. Global confidence levels have remained flat since the beginning of 2014, with 55% of middle market leaders expressing some confidence in the global economy, and 15% saying they are not confident at all.

Talent and regulations are top concerns for middle market leaders

For the first time, executives were asked to write their greatest internal and external challenges for both the near and long term. From an internal perspective, talented-related concerns emerged, including acquisition, retention, and training. External concerns include increasing competition and government regulations.


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