The National Center for the Middle Market (NCMM) announced that middle-market companies increased headcount by 2.2%, about 950,000 jobs, over the last 12 months, outpacing the overall economy which grew employment by 1.7%. Middle-market firms also grew revenues in the past 12 months at more than three times the rate of S&P 500 firms, growing at 5.5% versus 1.6%.

However, new research from the NCMM, a partnership between The Ohio State University Fisher College of Business and GE Capital, also finds a softening in expectations for middle-market firms. Over the next 12 months, projected employment growth has dropped to 1.3%, and projected revenue growth has fallen to 3.7%. These forecasts are important because the middle market constitutes nearly one-third of the private sector GDP and employment in the U.S.

“Though slowing, the middle market continues to create jobs and grow revenue despite weak confidence in both the national and global economies,” said Dr. Anil Makhija, academic director of the NCMM. “However, this quarter’s indicator shows that serious challenges for middle market companies are taking their toll, imposing lower expectations for employment and revenue growth in the year ahead. This is concerning for the U.S. economy as a whole given the middle market’s significant contribution to private sector employment and GDP.”

Revenue growth has exhibited a clear pattern of decline over the past three quarters of this year. For the previous 12 months, average revenue growth fell from 6.9% in Q1, to 6.1% in Q2, and now 5.5% in the Q3 survey. The percentage of middle-market executives expressing confidence in the U. S. economy has been low, and has fallen from 15% in Q1 to 12% in Q2, and now to 11% in Q3.

Nevertheless, the latest full year of growth in revenues, going back from the September third quarter survey, shows that the middle market had been growing so far at a faster rate than all but two of the world’s twenty largest economies – China and Indonesia.

To read the full NCMM report click here.