#United States #Chicago #Middle Market #RSM US #Business Index

Overview of Recent Middle Market Trends

The RSM US Middle Market Business Index (MMBI), a key indicator of the economic health of middle market firms in the United States, has recorded a decline, falling from 124.2 to 122.5 in the third quarter. This subtle drop signals growing concerns among executives as they navigate through a landscape marked by rising costs and fluctuating economic conditions.

Survey Insights

Conducted in collaboration with the U.S. Chamber of Commerce, this quarterly survey collected the insights of 404 middle market executives between July 14 and August 4, 2025. The results shed light on the subdued sentiment prevailing among these firms, revealing that only 37% of executives experienced any form of economic improvement, while 39% reported a growth in revenues.

Interestingly, even amidst a broadly pessimistic view, half of the surveyed leaders expressed optimism about potential improvements over the next six months. In contrast, many executives are currently grappling with the challenges posed by a competitive marketplace, high inflation rates, and reduced profitability owing to tight margins.

The Impact of Rising Costs

Rising input costs have emerged as a pressing concern for middle market firms. According to the survey, an alarming 67% of executives reported an uptick in the prices they pay for goods and services, yet only 48% were able to increase their own prices. This disparity in pricing dynamics has led to increased margin pressures, prompting many firms to reevaluate their inventory strategies heading into the holiday season.

Amid heightened tariff concerns, many companies reported that the pressure on their margins is compounded by the public tariff schedule suggesting further increases in raw material costs. Only 35% of respondents indicated any increase in their inventory levels in the current quarter, a significant decline compared to previous trends.

Cautious Hiring and Capital Spending

the survey indicates a cautious approach among middle market firms regarding hiring and capital expenditures. Just 34% of the executives reported that they had increased hiring in the quarter, while 43% indicated a willingness to raise employee compensation to attract talent. Looking forward, 46% expect to ramp up hiring, while 54% intend to boost wages in the near term.

Capital expenditure growth has similarly slowed; only 38% reported increased investment in productivity-enhancing technologies compared to 50% who anticipated future investments. These findings highlight a risk-averse sentiment that is shaping operational decisions within these firms.

Closing Remarks

Despite challenges, there's a glimmer of optimism as leaders anticipate potential economic relief stemming from new fiscal policies slated for 2026. Policy reforms could theoretically lead to a more favorable business environment, though executives underscore the need for a swift resolution to policy and trade-related uncertainties.

In conclusion, while the recent downturn in the MMBI reflects significant economic pressures, there exists a resilient spirit among middle market firms, with many executives remaining hopeful for recovery in the near future. It's crucial for stakeholders to monitor these trends closely to gauge the evolving landscape of the middle market ecosystem.

For further analysis on the MMBI and its implications for business strategy, readers can visit RSM’s official website.