December 18, 2018


RSM US Middle Market Business Index Reflects Strong 4th Quarter and Positive Outlook for First Half of 2019

WASHINGTON, D.C.— The RSM US Middle Market Business Index (MMBI), presented by RSM US LLP (“RSM”) in partnership with the U.S. Chamber of Commerce, remains strong. The MMBI posted the sixth highest result in the past four years, down slightly from the third quarter of 2018. Executives remain positive about economic growth as they look to 2019 but are cognizant of rising inflationary pressures, a historically tight labor market, and an uncertain outlook for tariffs and trade policy.

In the fourth quarter of 2018, the MMBI posted a composite score of 132.0, a slight 2.4-point decrease from last quarter’s 134.4. Business leaders anticipate a strong start to 2019, with 64 percent of survey respondents anticipating gross revenues to increase somewhat or substantially in the next six months and 61 percent expecting net earnings to increase over the same time period. However, they are beginning to feel inflationary pressures. Of leaders surveyed, 68 percent indicated their businesses experienced pricing pressures above and beyond rising compensation costs in the fourth quarter versus the third quarter, and 71 percent anticipate prices paid to increase somewhat or substantially during the next six months.

“This quarter’s MMBI performance conforms to our forecast for a moderating economy as we head into 2019, but business activity – particularly in the middle market – remains strong, and a recession is far from imminent,” said Joe Brusuelas, RSM US LLP chief economist. “Even so, clouds are forming on the horizon related to declining fiscal outlays later in 2019, inflationary pressures and, perhaps most importantly, an uncertain outlook for tariffs and trade policy.”

Navigating Rising Inflationary Pressures and the Historically Tight Labor Market

Low unemployment – which has hovered at or below 4 percent since April 2018 – prevails as a top concern for middle market businesses and is forcing higher wages amid a tightening pool of qualified workers. Eight percent of executives report that hiring levels decreased in this quarter, a cyclical low consistent with other labor market data, including initial jobless claims – which are at a 50-year low – and the low number of available workers per job opening. Nearly half of executives surveyed (48 percent) indicate that they increased compensation levels in the third quarter, while more than half (59 percent) expect to do so in the next six months.

“The recently imposed tariffs are negatively impacting businesses’ bottom line and threatening economic growth,” said Neil Bradley, U.S. Chamber executive vice president and chief policy officer. “American businesses and consumers are bearing the brunt of the current global trade war. Now more than ever, the U.S. needs free and fair trade to ensure our nation is able to continue its economic resurgence.”

Meanwhile, inflationary pressures appear to be impacting supply chains at a time when tariffs imposed on steel, aluminum, and a host of consumer goods have come into play. Sixty-eight percent of executives report that they paid higher prices for goods and services, excluding labor, in the fourth quarter, and 71 percent expect to pay higher prices in the next six months. A strong majority indicated they are experiencing inflationary pressures and expect those pressures to continue over the next year-and-a-half. As operating margins become tighter, nearly 60 percent of middle market businesses are currently passing price increases through to their customers.

The survey data that informs the index reading was gathered between October 8 and October 26, 2018. To learn more about the middle market and the MMBI, visit the RSM website.

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 700 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 ask 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.

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.

RSM US LLP is the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. For more information, visit, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.

About The U.S. Chamber of Commerce
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. For more information, visit and, like us on Facebook and follow us on Twitter.