Q3 2026 RSM US Middle Market Business Index
Key takeaways
Middle market business confidence during the third quarter remained near recent highs as tax cuts and surging profits fueled strong growth, according to the latest survey of executives in the RSM US Middle Market Business Index.
The index came in at a robust 111.8 for the third quarter, which is a statistically insignificant change from 113.6 in the second quarter.
The survey was conducted from July 7 to July 29 by The Harris Poll and was based on responses from 501 senior executives in middle market businesses.
By almost every measure, executives expressed optimism, with revenues and net earnings, both current and expected, pointing to robust growth conditions ahead.
Rising earnings tell the story. Recent data on corporate profits, adjusted for inventory valuation and capital consumption, surged to $400.9 billion in the second quarter from $74.4 billion in the first quarter.
Such a notable increase underscores our view that the economy and the middle market are doing far better than top-line gross domestic product data implies.
Revenues, net earnings and the economy
The increase in corporate profits as well as the strong sentiment data in the third-quarter MMBI survey align with the 3.4% increase in household consumption and the 4.2% growth in real final private domestic demand excluding trade and inventory.
The outlook for revenues and net earnings remains positive, with 68% of respondents anticipating an improvement in both areas over the next six months, while 58% expect improvement in the general economy over the same period.
Almost half of the executives, or 43%, noted that the economy improved in the current quarter; 58% stated that revenues improved; and 59% said net earnings increased.
Undoubtedly, the current strong growth is linked to the build-out of artificial intelligence infrastructure and the transformation of the American economy it will bring.
Since the shock of the pandemic, middle market businesses have turned to investing more in capital expenditures to prepare for a radically different economy.
That shift continued in the third quarter, with 57% of respondents saying they increased outlays on capital expenditures and 65% noting that they intend to do so over the next six months.
This is the most encouraging long-term trend we have observed in the middle market in the survey’s decade-long history.
Hiring, compensation and inventory accumulation
For the second consecutive quarter, 54% of executives said they increased hiring, while 60% indicated they intend to do so through the end of the first quarter next year.
As such, 57% of participants said they increased compensation in the current quarter, and 66% indicated they are prepared to put more money on the table over the next six months.
The most pressing economic challenge for middle market firms continues to be inflation: 75% of respondents indicated that they paid higher prices in the current quarter, while 76% expect to do so going forward.
The data on prices received continues to suggest that firms are absorbing those price increases via margin compression. Roughly 66% of participants indicated they increased prices in the second quarter, and 70% said they want to do so over the next six months.
Finally, 50% of respondents said they increased stock levels as the all-important holiday shopping season approaches, and 59% are prepared to do so over the next 180 days.
The takeaway
The American middle market is prospering amid a solid economic expansion. Current and future expectations on revenues, net earnings and the economy point to sustained growth amid strong corporate profits.
The upper end of the middle market appears to be prospering from the AI boom and the extraordinarily good financial condition of higher-income households.
But lower-end middle market firms are clearly facing challenges in keeping up with larger competitors.
But make no mistake: Optimism is growing, and business conditions across the middle market remain robust.
General economy
Gross revenues
Net earnings performance
Capital expenditures
Overall hiring
Employee compensation
Access to credit
Planned borrowing
Amount paid for goods and services
Amount received for goods and services
Inventory levels
To refer to the percentages in the subindex items, access the PDF.
On the middle market mind
We asked middle market executives about challenges facing their organization.
World tariffs. Slow economic growth.
Manufacturing executive
AI and machine learning taking over almost every aspect of business.
Manufacturing executive
The lack of skills to implement AI.
Manufacturing executive
Balancing cybersecurity, regulatory compliance and digital transformation.
Finance and insurance executive
The lack of technical investment.
Finance and insurance executive
Cybersecurity threats and talent retention.
Finance and insurance executive
AI is a challenge for our business right now. We keep going over budget due to unforeseen expenses
Health care executive
Paying employees what they’re worth and not catching up with inflation.
Healthcare executive
Our turnover rate.
Construction executive
Tariffs and taxes are raising the cost of materials.
Construction executive
Acquiring new customers cost-effectively while competing with larger companies.
Retail trade executive
Compliance.
Retail trade executive
Finding a return on investment for AI.
Retail trade executive
Implementation of agentic AI solutions.
Educational services executive
Supply chain disruptions continue to impact planning and delivery.
Real estate executive
Keeping our wholesale inventory synced in real time across our warehouses.
Wholesale trade executive
Higher costs of capital due to elevated interest rates.
Accommodation and food services executive
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ABOUT THE RSM US MIDDLE MARKET BUSINESS INDEX
The RSM US Middle Market Business Index provides a leading measure on the performance of businesses that make up the heart and soul of our country's economy. Data on these middle market firms is collected via quarterly surveys conducted by The Harris Poll.
RSM US LLP and The Harris Poll have collected data on middle market firms from a quarterly survey that 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 Middle Market Leadership Council, our survey panel, consists of approximately 1,600 middle market executives, and is designed to accurately reflect conditions in the middle market. The data is weighted to ensure that it corresponds to U.S. Census Bureau data on the basis of industry representation.
An index reading above 100 indicates that the middle market is generally expanding; a reading below 100 shows that the middle market is generally contracting. The distance from 100 is indicative of the strength of the expansion or contraction.
The MMBI survey is conducted four times a year. It is based on a subset of questions that ask middle market executives to report the change in a variety of indicators ranging from their organizations’ earnings to hiring levels and prices paid for goods and services.
The MMBI is a composite index computed as an equally weighted sum of the diffusion indexes for 10 survey questions plus 100 to keep results from becoming negative. The index is designed to capture views on both current and future conditions; it includes five questions on middle market executives' recent experiences and five on their expectations for the future.
- What are your expectations regarding the general economy?
- What are your expectations regarding your organization’s gross revenues?
- How would you describe the level of your organization’s most recent quarter net earnings results?
- What are your expectations regarding your organization’s aggregate capital expenditures or investments?
- What are your expectations regarding your organization’s overall hiring levels?
- How would you describe your organization’s current employee compensation level on average?
- How would you describe current access to credit?
- What are your expectations regarding your organization’s planned borrowing?
- How would you describe the current general level of prices received?
- What are your expectations regarding your organization’s planned inventory levels?
Each question in the MMBI index is seasonally adjusted using the Census X-13 method in order to remove periodic fluctuations associated with recurring calendar-related events. Seasonally adjusted values for questions make it easier to observe underlying fundamental changes, particularly those associated with economic expansions and contractions.
For this adjustment, the "increase" and "decrease" percentage components of each index question will be tested for seasonality separately and adjusted accordingly if such patterns exist. If no seasonality is detected, the component will be left unadjusted.