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News & Press: Partners

RSM US Middle Market Business Index remains robust

Monday, June 25, 2018  
Posted by: Susan Barber

RSM US Middle Market Business Index remains robust

Index eases slightly in tax plan’s wake

INSIGHT ARTICLE  | 

The RSM US MMBI eased to a still-robust reading of 134.5 in the second quarter, down slightly from a high of 136.7 three months earlier amid euphoria over the new tax legislation. The lagged impact of pro-cyclical fiscal stimulus in store should continue to stoke economic growth and support current middle market sentiment at these levels.

Rising international trade tensions and modest tightening of domestic and global financial conditions did little to dent overall market sentiment among middle market businesses in the second quarter. Executives say they expect to expand hiring and increase compensation amid strong revenues and net earnings. The MMBI report also examines middle market executives’ cautious outlook for capital expenditures following the 2017 Tax Cuts and Jobs Act (TCJA).

Among the key takeaways in this quarter’s report:

  • The middle market expects to expand hiring and increase compensation amid strong revenues and net earnings.
  • For the second consecutive quarter, executives indicate that they are facing rising prices, and are successfully passing those prices along to consumers downstream.
  • 55 percent of middle market businesses report that the economy improved, versus 69 percent previously.
  • 57 percent expect the economy to improve during the next six months, down from 73 percent during the first three months of the year.
  • One of the major unanswered questions after the 2017 Tax Cuts and Jobs Act is how businesses will respond to the changed incentive of a lower statutory rate. So far the response has been mixed.

Download the full Second Quarter 2018 report