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Mid-sized companies continue to like the Trump economy.
The second quarter Middle Market Index (MMBI), a partnership of RSM US and the U.S. Chamber, hit a new high of 132.1, up 2.3 points since the first quarter. A score above 100 means the middle market is expanding.
Fifty-five percent of those surveyed saw an improvement in the economy, and 62% expect improvement over next six months, down slightly from 69% in the first quarter.
“It’s encouraging to see the MMBI hit another record-high because stronger, faster economic growth is good for every American business and every worker,” said Tom Sullivan, U.S. Chamber vice president, Small Business Policy and Middle Market Business Council Executive Director.
One highlight from the survey is revenue and profits. More than half (55%) saw higher revenues and (53%) profits in the second quarter, and two-thirds expect both to increase over the next six months.
Another sign of confidence is business investment is on the upswing. The share of businesses increasing capital spending rose from 34% to 41%, and those planning future spending over next six months rose from 47% to 51%.
Hiring is also a bright spot. Nearly half (47%) of companies said they hired more workers, up from 37% in the last quarters. Half also said they’ll hire more over the next six months. And in a sign of a tightening labor market, 56% expect to offer greater compensation over the next six months to lure new workers.
But the flip side to wanting to hire more workers is finding them. It’s getting tougher, and middle market companies are being more creative. Over half (55%) are using training or educational opportunities to attract workers, 49% are offering flexible schedules, and a little over a third (36%) will targeting veterans to fill open slots.
The middle market’s off-the-charts confidence should be a warning flag to Washington. There’s the potential for a mismatch between policy expectations and results. “Given the political turmoil in Washington D.C., expectations on tax reform and infrastructure spending may need to be reset going forward, which would likely be accompanied by a reduction in the outlook for gross revenues,” said RSM US' Chief Economist Joe Brusuelas.
When it feels like things are bogged down on health care or tax reform or infrastructure, the MMBI is reminder for leaders in Washington that a lot is riding on them to get things done.