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GE: Confidence Among Middle Market Companies Fueling Investment

July 24, 2013, 07:08 AM
Filed Under: Economic Commentary

Successive quarters of strong performance by the nation's nearly 200,000 middle market companies is fueling increased confidence in the national and global economies.  According to the latest Middle Market Indicator (MMI), a survey of 1,000 middle market executives released by the National Center for the Middle Market (NCMM), revenue growth is stabilizing above five percent and employment growth projections have increased 20 percent over last quarter.  The NCMM is a partnership between The Ohio State University's Fisher College of Business and GE Capital. 

The full survey results are available at

According to this quarter's MMI, mean revenue growth has stabilized above five percent, reaching 5.8 percent this quarter and projected at 5.1 percent for the year ahead.  The highest growth gains are anticipated in the services and financial industries at six and 6.2 percent respectively.  Retail trade forecasts the lowest revenue gain at 4.2 percent, which is still well above the S&P 500's estimated revenue growth of 1.2 percent.

As revenue growth stabilizes significantly above the national average, employment growth is projected to increase 2.5 percent, which represents a 20 percent increase in forecasts compared to 2.1 percent for the first quarter of 2013.  At this rate, the middle market will generate 70 percent of all new U.S. employment this year.  Employment growth projections among middle market manufacturers were particularly significant, increasing from 1.2 percent in the first quarter to 2.2 percent.  Furthermore, 43 percent of all middle market companies project employment increases over the next 12 months, compared to 38 percent of companies last quarter.

"Middle-market business leaders are becoming more optimistic about the U.S. and global economies, and are projecting current revenue growth within their own businesses to continue in the near future," said Dan Henson, president and CEO of GE Capital, Americas.  "With a developing sense of confidence, executives are beginning to reinvest in their businesses and hire additional staff.  As the leading lender to the middle market, we're committed to supporting this critical sector of the economy."

Confidence on the Rise

The confidence of middle market executives in the national and global economies experienced the greatest gains since the survey commenced in 2012.  A record 48 percent of executives reported confidence in the global economy, compared to 22 percent last year.  Further, nearly two-thirds of middle market executives are at least partially confident in the U.S. economy, compared to 50 percent one year ago.  Confidence among executives in the services, manufacturing, wholesale trade and construction industries was particularly high. 

This growing sense of confidence in the economic outlook at the national and global levels is encouraging executives to take additional growth-related initiatives through new investments.  One year ago, middle market companies were split between whether to invest or hold onto extra cash, at 51 percent and 49 percent respectively.  This quarter, nearly two-thirds of middle market executives plan to invest rather than hold on to extra cash.

"Our latest survey revealed that companies who experienced growth over five percent in the past year are more likely to consider making acquisitions in the future," said Dr. Anil Makhija, Academic Director for NCMM.  "These companies are making critical investments in the people and technology required to increase productivity and perpetuate growth into the future.  It is encouraging to see this large segment of the economy settle into a stable and optimistic growth trajectory, where increased investment will fuel additional revenue and employment gains well into the future."

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