RSM US Middle Market Business Index Eases Slightly in May but Overall Remains Strong as the Economy Continues to Reopen

U.S. middle market firms continue to signal growing confidence in the relaunch of the American economy, according to the May survey.


Authored by RSM US LLP

RSM US LLP (RSM) – the nation’s leading provider of audit, tax and consulting services focused on the middle market – today announced results of the May 2021 reading for its RSM US Middle Market Business Index (MMBI). May’s data revealed that the while MMBI composite score eased to 129.7 in May from 132.0 in April, and is off its peak of 137.3 in 2018, it remains strong despite the ebb and flow of the economy’s gradual reopening. The survey points to an acceleration of economic activity over the next six months as firms, supported by rising net earnings and revenues, are poised to increase hiring and compensation even as concerns about rising prices grow.

For the first time since the onset of the pandemic, the May MMBI showed that a majority (52%) of the middle market executives believe the economy is improving, and 67% anticipate it will do so for the rest of the year. Additionally, although only 47% and 45% of participants noted an improvement in gross revenues and net earnings, respectively, 72% and 63% of respondents signaled that they expect a surge in both over the next six months. “The forward-looking readings in the May MMBI underscore our outlook that the economy will continue to boom throughout the year,” said RSM Chief Economist Joe Brusuelas. “We expect that the second quarter of this year will mark the point at which the economic recovery turns to expansion, and at RSM, we are forecasting 7.5% growth for 2021. The survey results agree with that optimistic outlook, as 69% of executives indicated they intend to increase compensation to support hiring and retention and 61% signaled an acceleration in hiring over the next six months.”

An expected increase in revenues and earnings will support an expansion of capital expenditures, which are key to increasing productivity and will be critical for middle market businesses in the hyper-competitive, post-pandemic economy. According to the May MMBI, 53% of executives intend to increase capital expenditures over the next six months, down from 62% in April. The pandemic average on the current reading stands at 33%, and RSM expects a significant release of pent-up demand in investment around software, equipment and intellectual property that will bolster competitiveness.

The May MMBI also explores some of the risks facing both the middle market and the broader American economy, which are linked to supply chain constraints that increased the prices of goods used at earlier stages of production, intermediate goods, software and personnel as demand has outpaced supply. Roughly 80% of executives indicated that they paid higher prices during the month and 82% expect to do so over the next six months. However, only 47% implied that they passed along those higher prices in May, which is up modestly from the 44% who reported they did so in April.

“The prices paid readings are in line with those of recent years when inflation remained below 2%, so there is not yet a clear and convincing signal that the recent bout of price volatility will turn into sustained inflation,” said Brusuelas. “At this point, rising prices are largely confined to a segmented cluster of the economy that lay primarily within the manufacturing and residential investment ecosystems, but demand for services will temporarily outstrip supply as it rebounds, likely causing service prices to jump. Seventy-two percent of respondents said they intend to charge higher prices over the next six months; without a doubt, this is going to be the risk around the middle market and American economic outlook this year and next. Stay tuned because price volatility is likely going to get worse before it gets better.”

The May 2021 MMBI data was collected between May 10 and May 21, 2021.    

Typically a quarterly index, the firm released monthly installments of the MMBI during the COVID-19 pandemic. The May 2021 MMBI is the last of the monthly MMBI readings, and the next quarterly reading is slated to publish in August 2021.   

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 48,000 people across 120 countries. For more information, visit, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.

This article was written by RSM US LLP and originally appeared on 2021-06-10.
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