Q3 2022 Middle Market Business Index


September 08, 2022


The RSM US Middle Market Business Index (MMBI), presented by RSM US LLP (“RSM”) in partnership with the U.S. Chamber of Commerce, increased to 138.5 in the third quarter, up 7.3 points from the previous quarter. The statistically significant increase in topline sentiment is indicative of strong overall activity and solid middle market business conditions, even as inflation remains elevated.

“An economy displaying such a robust reading, along with business conditions that have produced 3.4 million jobs over the first seven months of the year and unemployment of 3.5%, is not consistent with a recession,” said Joe Brusuelas, RSM US LLP chief economist. “This upside, however, is clearly tempered by elevated prices and rising wages that have likely soured firms’ outlook on the economy now and over the next six months. Even so, with revenues and net earnings still solid, and a majority of MMBI respondents indicating they should improve, the prospect of a recession has probably been pushed into 2023.” 

Cautiously Optimistic Business Sentiment in the Middle Market

Despite two consecutive declines in quarterly gross domestic product in the first half of 2022, business conditions appear impressively resilient when looking ahead. While 48% percent of the surveyed middle market executives said gross revenues increased in the current quarter, 60% stated they expect them to improve over the next six months. Half of the survey participants also stated net earnings improved in the third quarter, with 59% indicating they expect improvement in the near term.

The ability to pass along price increases is bolstering revenues, net earnings and forward-looking expectations of both. More than seven in ten survey respondents reported increasing their prices, the highest in the history of the MMBI. Only 7% of respondents said they had difficulty passing along price increases. Firms’ ability to pass along these price increases without causing demand destruction downstream underscores the resilience of the middle market.

Only 30% of survey respondents stated that the economy improved in the current quarter and only 39% expect it to improve over the next six months. RSM attributes this sentiment among middle market executives to wage increases and higher input prices.

“This quarter's index is a strong indication that companies continue to feel good about their own business operations, despite persistent negative attitudes on the overall economy,” said Neil Bradley, executive vice president, chief policy officer and head of strategic advocacy at the U.S. Chamber of Commerce. “Inflation challenges remain top of mind, and as labor costs continue to push up, we're going to continue to see these inflationary pressures in the economy.”

Wages and Tight Labor Continue to Pressure  

In service-providing industries, which have an outsize presence in the middle market, rising wages are the primary source of inflation and will continue to weigh on business decision-makers. Reaching a record high, two in three survey respondents reported increasing employee compensation in the current quarter. Surveyed executives did not expect a change in near term hiring levels, despite a significant increase in hiring in the current quarter 

Nearly six in ten (58%) respondents reported an increase in staff over the last three months, the highest share on record. In contrast, those reporting a reduction in head count hit a 3-year low in the third quarter.

Survey responses around capital outlays are a source of continued optimism in the middle market, as investments in both technology and people are critical to boost efficiencies and output during a period of tight labor supply and high inflation. Forty-one percent of surveyed executives increased productivity-enhancing capital expenditures during the third quarter, and 53% indicated they expect to do so over the next six months.

When asked about inventories, 48% of executives said their organizations increased levels during the third quarter. Fifty-five percent indicated they plan to increase inventories in the near term, reflecting both the upcoming holiday season and the need to meet still-brisk demand for goods and services. RSM anticipates that upper-income consumers will retain the capacity to clear those levels, but businesses with exposure to down-market households should take a cautious approach to inventory management as inflation remains elevated.

The survey data that informs this index reading was gathered between July 5 and July 26, 2022.

About the RSM US Middle Market Business Index 

RSM US LLP and the U.S. Chamber of Commerce have partnered to present the RSM US Middle Market Business Index (MMBI). It is based on research of middle market firms conducted by Harris Poll, which began in the first quarter of 2015. The survey is conducted four times a year, in the first month of each quarter: January, April, July and October. The survey panel consists of approximately 1,500 middle market executives and is designed to accurately reflect conditions in the middle market. 

Built in collaboration with Moody’s Analytics, the MMBI is borne out of the subset of questions in the survey that asks respondents to report the change in a variety of indicators. Respondents are asked a total of 20 questions patterned after those in other qualitative business surveys, such as those from the Institute of Supply Management and National Federation of Independent Businesses. 

The 20 questions relate to changes in various measures of their business, such as revenues, profits, capital expenditures, hiring, employee compensation, prices paid, prices received and inventories. There are also questions that pertain to the economy and outlook, as well as to credit availability and borrowing. For 10 of the questions, respondents are asked to report the change from the previous quarter; for the other 10 they are asked to state the likely direction of these same indicators six months ahead. 

The responses to each question are reported as diffusion indexes. The MMBI is a composite index computed as an equal weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep the MMBI from becoming negative. A reading above 100 for the MMBI indicates that the middle market is generally expanding; below 100 indicates that it is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction. 

About The U.S. Chamber of Commerce  

The U.S. Chamber of Commerce is the world’s largest business organization representing companies of all sizes across every sector of the economy. Members range from the small businesses and local chambers of commerce that line the Main Streets of America to leading industry associations and large corporations.  

They all share one thing:  They count on the U.S. Chamber to be their voice in Washington, across the country, and around the world. For more than 100 years, we have advocated for pro-business policies that help businesses create jobs and grow our economy.  


RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.

Q3 2022 Middle Market Business Index