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Sponsored by: KeyBank
September 25, 2023

In the face of persistent uncertainty, resilience is crucial for middle market business owners

Matthew Hummel, KeyBank Market President and Commercial Banking Market Executive

For the past 12 months, business owners have braced for an economic downturn. According to KeyBank’s most recent Middle Market Business Sentiment Survey, 21% of respondents (1) believe the downturn has already arrived, and more than half expect it to hit by middle of 2024. While they are confident in their own companies’ prospects, their outlook on the broader economy is less positive. Inflation continues to be a concern, followed by high costs of labor and raw materials. A small number of businesses anticipate that capital and cash flow concerns could hinder their growth; others cite labor challenges as they attempt to bring remote workers back to the office.

As leader for a team of commercial banking lenders in Connecticut and Western Massachusetts, the national survey results resonate with what my team and I are hearing from local clients. While their concerns about inflation are easing, some continue to report supply chain disruption, and difficulty attracting and retaining talent.

Here are highlights from KeyBank’s Q3 Middle Market Business Sentiment Report. The full report can be viewed at Businesses & Institutions at

Company optimism holds steady, but the broader economic outlook has weakened

  • 73% of respondents characterized the outlook for their company’s financial performance in the next 12 months as excellent or very good.
  • Only 45% said the outlook for U.S. economy is excellent/very good, a dip from 61% in September 2022.
  • Construction industry leaders are the most bullish, with 57% feeling excellent/very good about the broader outlook over the next 12 months.

Companies are finding success despite uncertainty

  • Leaders who were optimistic about their companies’ prospects are expecting moderate (58%) to significant (35%) revenue increases over the next 12 months.
  • Growth and investment plans include expanding the use of technology and automation (48%); adding employees (48%); implementing process improvements (47%); and adding or renovating facilities (30%).

Inflation still tops list of challenges

  • Inflation is still a top concern, followed by high costs of labor and raw materials/commodities.
  • Supply chain issues are negatively affecting 33% of respondents’ businesses, compared to 29% last quarter.
  • 28% cited the ability to retain talent as negatively impacting their businesses, compared to 21% last quarter.

Some anticipate capital and cash flow concerns

  • 21% reported that higher borrowing costs are negatively impacting their businesses, and 16% said they currently have cash flow concerns.
  • Among those with cash flow issues, 58% are concerned about their ability to invest in growth, and 49% are concerned about funding salary increases.
  • 48% feel concerned about their ability to offset unexpected expenses or financial emergencies, an increase of 10 percentage points since March.

Labor challenges intensify as companies encourage return-to-office

  • 38% believe it will be difficult or very difficult to fill their company’s job openings over the next six months.
  • Healthcare companies are having a particularly hard time: 50% in this industry said it will be difficult or very difficult to fill open jobs through the end of 2023.
  • 59% of leaders with a neutral or negative company outlook reported hiring difficulties.
  • Over the past six months, among employers who offer remote work as an option, 54% asked employees to return to or spend more time in their offices — and over the next six months, 60% plan to make this request.
  • 42% believe it will have a positive impact on attracting and retaining talent, yet only 26% of those who have already asked employees to return to the office believe it will improve their labor issues.

In the fourth quarter, some middle market companies are forging ahead with expansion plans and investing in growth while others anticipate cash flow challenges. Regardless of the industry, middle market leaders have one thing in common: they’ve navigated an uncertain economy for months — and in such an environment, resilience remains one of their greatest assets.

KeyBank’s experts have the strategic insights to help your business manage liquidity, mitigate risks and identify growth opportunities in an uncertain economic environment. To learn more about KeyBank’s middle market capabilities, contact Matthew Hummel at 860-293-4138 and

About the author:

Matthew Hummel is President and Commercial Banking Market Executive for KeyBank’s Connecticut and Massachusetts market, overseeing the bank’s customer service and business development efforts throughout the market. He leads the middle market sales team dedicated to providing expertise and financial solutions to commercial clients and is also accountable for driving collaboration and coordination of activities and resources to grow the bank’s presence and market share.