GRAND RAPIDS — Middle-market companies across the Midwest expect smaller sales and employment gains in 2017 than their counterparts nationally, a sign that regional business growth is possibly peaking.
Middle-market executives in the Midwest responding to the quarterly survey by the Columbus, Ohio-based National Center for the Middle Market project revenues to grow an average of 4.6 percent during the year. That compares to expectations nationally for revenue growth of 5.5 percent, according to survey results.
Those projections are consistent with performance of the last 12 months where executives in the 10-state Midwest area reported average revenue growth of 5.5 percent, which compares to 6.9 percent nationally.
Executives project 4-percent growth in employment at Midwestern middle-market companies, versus 5.4 percent nationally.
Results from the survey indicate that economic growth in the industrial Midwest is hitting a plateau compared to the rest of the U.S., said Doug Farren, managing director at the National Center for the Middle Market, which is housed at The Ohio State University’s Fisher College of Business.
2017 should “continue to be a good year” for the middle market in the Midwest, although companies may still lag average performance nationally.
“If the performance has kind of maxed out, then there may not be an opportunity to continue to grow at stronger levels,” Farren said. “That’s not to say the Midwest should be expecting some type of a dip or drop off. It’s just that they may have already peaked somewhat in terms of maximizing performance.”
Farren notes that economic confidence in the Midwest remains strong and that executives do “tend to be highly conservative, (so) we’re not that alarmed to see that the projections are lower.”
“It doesn’t mean they’re projecting a softening business climate. We just see that as a highly conservative projection and they’re more than likely going to beat the projection,” he said. “The political climate bears a little bit of watching. If some of the nonsense starts to go away and things actually happen that are seen as positive and concrete, then perhaps some of that uncertainty goes away and the perceptions get even stronger.”
Farren and National Center for the Middle Market Executive Director Thomas Stewart will present results from the latest survey of 1,000 executives nationally — including 278 from the Midwest — during an Association for Corporate Growth Western Michigan chapter event on Wednesday, Jan. 18, at the University Club in downtown Grand Rapids.
Farren and Stewart will also discuss best practices for working capital management, talent planning, and the importance of cybersecurity. Registration is open until the day before the event.
The center defines the middle market as companies with $10 million to $1 billion in annual revenues. The middle-market survey includes an array of sectors, topped by professional services, manufacturing, retailers and wholesalers.
Executives at responding companies in the Midwest do hold a more confident view of their local economy. Eighty-eight percent of respondents in the Midwest “are feeling pretty good about the local economy,” versus 79 percent nationally.
Seventy-two percent of companies in the Midwest — compared to 65 percent nationally — plan to make capital investments in 2017 for projects such as information technology, infrastructure and training, Farren said.