4Q 2014 Middle Market Indicator

As 2014 draws to a close, performance in the middle market is strong across all revenue segments, capping off a solid year of growth. The outlook for 2015 is equally as positive across the spectrum. While revenue growth remains strong, employment growth has accelerated. Mean total employment growth has doubled since a year ago, with middle market firms adding twice as many jobs in 2014 as they did in 2013. Looking forward, the number of middle market leaders anticipating growth in both revenue and employment in 2015 has increased significantly since last quarter.


Key Insights

For Q4 2014, significantly more middle market firms (73%) reported a year-over-year increase in revenue growth than last quarter. Since last quarter’s jump in mean total revenue growth for the overall middle market, the numbers remain fairly stable at 7.2%, up from 5.0% in Q4 2013.

Nearly three-quarters (74%) of middle market firms expect revenue to increase in 2015, up 10 percentage points from Q3 2014. While firms across all revenue segments expect to grow, the core middle market has shown a dramatic turn around in future outlook. The overall middle market expects to grow by 6% over the next 12 months.

Employment growth approaches revenue growth

While the rate of revenue growth has consistently outpaced the rate of employment growth in the middle market, in Q4 2014, the gap narrowed noticeably. Almost half (49%) of middle market leaders reported an increase in staff over the past year, and mean total year-over-year employment growth increased significantly to 5.0%, doubling since Q4 2013.

Global confidence remains weak compared to national and local

Eight in 10 middle market leaders express confidence in the local economy and nearly three-quarters are confident in the U.S. economy. Yet, just over half have a positive or somewhat confident outlook regarding the global economy. Even so, while global economic confidence has slipped slightly since the first quarter of 2014, current global confidence levels remain well above those reported in 2012 and early 2013.

More firms are willing to invest

For the first time since the fourth quarter of 2012, there is a noticeable increase in the number of middle market leaders planning to invest cash. In Q4 2014, more than two-thirds (68%) say they would invest, while 32% say they would keep their cash, nearly a 10% difference from the end of 2012.


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