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U.S. middle-market companies reported 12.4% yearly revenue growth on average in 2023, the highest rate recorded since Ohio State University started surveying the firms after the Great Recession. Revenue stayed flat at 0.5% growth among the S&P 500 year-over-year.
More than seven in 10 owners express confidence in the global and U.S. economies ahead, while eight of 10 feel good about their local markets, according to the December survey of leading executives by OSU's National Center for the Middle Market. The Fisher College of Business center concentrates on companies with $10 million to $1 billion in annual revenue.
Despite last year's forecasts of a recession, 77% of middle-market businesses reported "high levels of performance improvement" for 2023, up from 72% in the prior year's survey.
"The middle market continues to be a source of consistent growth across various sizes, industries and geographies,” Doug Farren, the center's managing director, said in a news release. "These companies demonstrate a willingness to invest in expansion through new products and services or entering new markets, and are particularly curious about the benefits as well as risks of AI in their business."
One in three survey respondents last year reported either using or testing AI tools.
Hiring is still way up compared with 2021, with average 9.6% staff growth reported in December compared with 10.1% mid-year. Before the pandemic, employment growth was less than 5%. A growing number of businesses surveyed, 78%, said they have reached optimal size, according to the report.
The sector's hiring far outpaces others: 2.2% growth for small businesses and 0.1% for large corporation, the report said, citing ADP data.
Inflation, the possibility of a recession and labor shortages continue as the prime worries for business, and many middle-market companies are raising prices as a result, the report said.
Ohio State formed the center in 2011 to study the sector, saying 200,000 U.S. middle-market businesses outperformed smaller and larger firms during the 2007-10 financial crisis. Private sponsors help fund the research, most recently commercial insurance company Chubb and Visa.