Forward-looking components in the RSM US Middle Market Business Index imply that midsize firms are ready to expand hiring and bolster compensation over the next six months as the real economy reopens and enters a hyper-competitive post-pandemic period.
We expect middle-market hiring will boom ahead of the April U.S. employment report, which will be released on Friday. It is highly likely that the private sector will generate more than 900,000 jobs for the second straight month.
While it is encouraging that 59% of respondents to the RSM US Middle Market Business Index survey in March indicated that they were ready to move strongly in hiring, there is still some ways to go until employment conditions in the middle market return to their pre-pandemic levels.
Our estimation of midsize-business employment using ADP private-sector payroll data indicates that middle-market employment remains roughly 2.13 million jobs short of its pre-pandemic level in February 2020.
Since last May, midsize companies have added back 2.76 million jobs following the 4.9 million private-sector jobs lost in the March-April period last year.
That compares with the 3.74 million jobs generated by small firms and 4 million jobs added by large firms over that same period following the 5.37 million jobs lost by small firms in March and April last year and 9.31 million jobs shed by large firms during that same time frame. The March ADP estimate is quite different from the Bureau of Labor Statistics data, so all of these are likely to be substantially upgraded.
During the long economic winter, we have often noted that the midsize firms that comprise the backbone of the American real economy fared better than smaller businesses, and, because of their resilience, did not shed the jobs the way that large firms did.
It is not surprising that midsize firms have added back roughly 26% of all jobs generated since the bloodletting stopped last May compared with the 35% in the small category and 38% in the large category.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.