Business conditions point to continued robust economic growth, rising revenues and net earnings during the third quarter and going forward over the next six months despite pricing pressures, according to recent data, presented by RSM in partnership with the U.S. Chamber of Commerce.
This comes after the MMBI increased from 133.6 in the second quarter to 145.5 in the third quarter of 2021.
The survey revealed that 64% of respondents stated the broader U.S. economy improved in the current quarter and 65% expect it to do so over the next six months. This is in line with the 59% of respondents that indicated an improvement in gross revenues and the 74% that expect revenues to increase through the remainder of 2021.
Similarly, 56% of survey respondents noted a third-quarter improvement in net earnings and 65% anticipate earnings growth in the six months ahead.
The primary challenge for middle market businesses continues to be the pricing environment, as global and domestic economies grapple with supply chain constraints.
74% of survey respondents indicated that they paid higher prices for inputs and 76% stated they expect to do so over the next six months.
Notably, the 76% figure marks a decline from 85% in the second quarter MMBI and is aligned with indications from the July U.S. consumer price index that price volatility is starting to moderate.
Responses from this quarter’s MMBI also showed that businesses are elevating ESG measures as a priority, with 41% of respondents indicating their organizations have devised a formal plan around ESG issues.
Joe Brusuelas, RSM US LLP chief economist, said: “Based on the current quarter and six-month forward-looking data in the MMBI survey, we’re expecting 2021 to be the best year of middle market growth in the past four decades.
“This is evidenced by increasing revenues and net earnings, as well as a willingness to increase compensation to attract and retain labor in order to meet growing demand.”
Neil Bradley, U.S. chamber executive vice president and chief policy officer, added: “The economy has taken off this quarter with middle market business leaders seeing rising revenues, increased consumer demand, and better business conditions with loosened Covid-19 restrictions. But the surge comes with remaining supply chain issues and difficulty finding workers.”