RSM US Middle Market Business Index has witnessed an “impressive Increase” in March as business leaders prepare for an economic boom.
Typically a quarterly index, the firm is releasing monthly installments of the MMBI for the duration of the pandemic. For March’s reading, the MMBI composite score increased to 127.4 from 122.4 in February, revealing growing confidence in the economy among middle market leaders.
The March MMBI data revealed that 55% of respondents indicate that over the next six months they expect to increase productivity-enhancing capital expenditures. This is the best reading in the capital spending sub-index since just after the passage of the 2017 Tax Cuts and Jobs Act and reflective of what is expected to be a hyper-competitive post-pandemic economy.
While only 35% of middle market firms surveyed are deploying more capital right now, as the economy begins to reopen, the emergence of pent-up demand by businesses to invest in their own futures, along with higher household spending, will provide the foundation of the better-than-7% pace of growth that underscores the RSM US economic forecast this year.
In addition to planned accelerations in investments, plans to hire also saw record highs, with 59% of respondents saying they will increase hiring over next six months.
RSM chief economist Joe Brusuelas said: “The middle market is the heart and soul of American business, and as the middle market goes, so goes the U.S. economy. Based on the March results, policymakers, investors and chief executive officers should prepare for a coming economic boom as the real economy recovers and enters expansion this year.
“It’s our position that this will likely unleash the strongest period of American growth since the late 1980s, and, quite possibly, the post-World War II period. Beneath the top-line data, we can infer that growing confidence in economic prospects linked to rising vaccinations and the fiscal floor put underneath the economy over the past year has bolstered middle market business confidence and is shaping expectations of changing behavior in the short term that will boost economic activity.”
He added: “How middle market firms manage the early phase of recovery will, in part, be characterized by constrained global supply chains and higher prices in the near term.”