Page 19 - The South China Business Journal
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report marks a The RSM US Middle Market Business Index (MMBI), presented by RSM US
record-high on both LLP (“RSM”) in partnership with the U.S. Chamber of Commerce, climbed
current and forward- to an all-time high in the 2018 first quarter, with business leaders bullish on
looking economic economic strength, the arrival of large tax cuts, a strong labor market, and
conditions, signaling increased spending they believe will be reflected on the bottom line. The
leaders are confident report marks a record-high on both current and forward-looking economic
the economy will conditions, signaling leaders are confident the economy will remain a strong
remain a strong environment for business over the next six months.
environment for
business over the In the first quarter of 2018, the MMBI posted a composite score of 136.7, a
next six months. 4.5-point increase overtaking last quarter’s 132.2 record. (A reading above
100 indicates an expanding middle market.) The report comes amidst an
incredibly tight labor market, yet 58 percent of business leaders report plans to
increase hiring over the next six months.
“This quarter’s MMBI findings correspond nicely with the direction of
fundamental hard data, soft data and anecdotal evidence we’re seeing
nationwide,” said Joe Brusuelas, RSM US LLP chief economist. “The U.S.
economy is growing well above its long-term trend of 1.5 percent amid a
tightening labor market that’s fueling wage growth. This could lead to potential
near-term middle market economic headwinds as the difficulty in finding
skilled, semi-skilled and public-facing labor increases as does the potential for
ongoing trade spats that risk escalating into a full-blown trade war.”
In an effort to attract talent in these labor conditions, 62 percent of middle
market leaders report plans to increase compensation over the next 180 days;
49 percent reported doing so during the current quarter.
“The middle market employs forty million Americans and a majority of
these are planning to raise wages for their employees. This is great news for
American families and further proof that pro-growth policies like deregulation
and tax reform work,” said U.S. Chamber of Commerce Middle Market
Business Council Executive Director Tom Sullivan.
Revenue on the Rise Amidst Inflation Expectations
According to the report, revenue expectations remain strong, with 75 percent
of middle market leaders expecting increases in the next six months. Middle
market executives also reported fresh cyclical highs on increased prices
received versus the last quarter and expectations over the coming six months,
indicating middle market businesses believe they have sufficient market power
to begin passing price increases to customers downstream.
Lack of Investment in Digital Economy Emerges as Concerning Trend
Despite a track record of increasing optimism, middle market businesses
remain hesitant on capital expenditures, a concern as the digital economy
constantly demands more advanced technology and could leave mid-sized
companies struggling to catch up. A lag in capital expenditures has been a
theme for middle market businesses over the past few quarters; despite strong
reports on profits, revenues and economic outlook, less than half of middle
market executives reported increasing capital spending this quarter.
South China Business Journal 17
record-high on both LLP (“RSM”) in partnership with the U.S. Chamber of Commerce, climbed
current and forward- to an all-time high in the 2018 first quarter, with business leaders bullish on
looking economic economic strength, the arrival of large tax cuts, a strong labor market, and
conditions, signaling increased spending they believe will be reflected on the bottom line. The
leaders are confident report marks a record-high on both current and forward-looking economic
the economy will conditions, signaling leaders are confident the economy will remain a strong
remain a strong environment for business over the next six months.
environment for
business over the In the first quarter of 2018, the MMBI posted a composite score of 136.7, a
next six months. 4.5-point increase overtaking last quarter’s 132.2 record. (A reading above
100 indicates an expanding middle market.) The report comes amidst an
incredibly tight labor market, yet 58 percent of business leaders report plans to
increase hiring over the next six months.
“This quarter’s MMBI findings correspond nicely with the direction of
fundamental hard data, soft data and anecdotal evidence we’re seeing
nationwide,” said Joe Brusuelas, RSM US LLP chief economist. “The U.S.
economy is growing well above its long-term trend of 1.5 percent amid a
tightening labor market that’s fueling wage growth. This could lead to potential
near-term middle market economic headwinds as the difficulty in finding
skilled, semi-skilled and public-facing labor increases as does the potential for
ongoing trade spats that risk escalating into a full-blown trade war.”
In an effort to attract talent in these labor conditions, 62 percent of middle
market leaders report plans to increase compensation over the next 180 days;
49 percent reported doing so during the current quarter.
“The middle market employs forty million Americans and a majority of
these are planning to raise wages for their employees. This is great news for
American families and further proof that pro-growth policies like deregulation
and tax reform work,” said U.S. Chamber of Commerce Middle Market
Business Council Executive Director Tom Sullivan.
Revenue on the Rise Amidst Inflation Expectations
According to the report, revenue expectations remain strong, with 75 percent
of middle market leaders expecting increases in the next six months. Middle
market executives also reported fresh cyclical highs on increased prices
received versus the last quarter and expectations over the coming six months,
indicating middle market businesses believe they have sufficient market power
to begin passing price increases to customers downstream.
Lack of Investment in Digital Economy Emerges as Concerning Trend
Despite a track record of increasing optimism, middle market businesses
remain hesitant on capital expenditures, a concern as the digital economy
constantly demands more advanced technology and could leave mid-sized
companies struggling to catch up. A lag in capital expenditures has been a
theme for middle market businesses over the past few quarters; despite strong
reports on profits, revenues and economic outlook, less than half of middle
market executives reported increasing capital spending this quarter.
South China Business Journal 17
