Middle market companies – those with annual revenues of $10 million to $1 billion – represent 197,000 U.S. businesses and one-third of the private sector GDP. They employ approximately 43 million people and as such can be a real barometer of the overall U.S. economic condition. RTi Research conducts an ongoing quarterly study for The National Center for the Middle Market (a partnership between GE Capital and The Ohio State University Fisher College of Business). The most recent wave, Middle Market Indicator 2Q 2015, found that “more middle market companies are experiencing growth than at any other time in the history of the Middle Market Indicator”. But the tracking survey trends indicate that growth rates and expectations are declining slightly.

Some of the key findings from the 2Q study:

Continued but slower expected revenue growth

  • In 2Q 2015, middle market companies reported gross revenue growth rates of 6.6%, unchanged versus a year ago, but slightly below the 7% reported over the previous three quarters. MM firms expect a somewhat slower growth of 5.1% over the ensuing 12 months, an indication of tempered expectations.

A parallel softening trend in employment growth rates

  • Mid-market sector firms continue to hire, with 46% indicating work force increases. But the rate of employment growth, while stronger than last year, is down from 4.3% in 1Q.

Talent and regulation remain key concerns

  • Employment issues, including hiring and retention, continue to be a challenge for middle market enterprises. Government regulation and competition remain the top external challenges.

Confidence in national and local economies continues despite cost concerns

  • Mid-market managers remain confident in the local/regional economy, the main hub of operations for middle market firms. Nevertheless, sector business leaders continue to flag health care costs and taxation as revenue growth inhibitors.

So, for those of you also in the middle market, what do these trends mean for your businesses? Do you agree? What’s your company experiencing? What are your executives thinking?

As market researchers, we always want to hear directly from those of you at the forefront of the marketplace.