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Data from RSM has found that 53% of middle market businesses have seen their turnover increase in Q3 2023.
Alongside this 54% of businesses stated that their profit had increased in the last quarter.
This increase in turnover and profit has come after 55% of businesses stated that they had put their prices up.
The proportion of firms saying they were having to pay more for their inputs fell from 72% to 65%.
The increase in the number of firms increasing their prices suggests inflation may fall only slowly.
Furthermore, there was a major increase in the proportion of firms saying they were hiring more people from 43% to 54%.
There was also an increase in the number of firms paying their people more money from 44% up to 55%.
Thomas Pugh, economist at RSM UK, said: “Our latest quarterly index reveals that many middle market businesses are in good shape. Much of the increases we are seeing in our index stem from an improvement in the ability of firms to pass on price increases to their customers, which is driving a significant increase in expectations around revenue and profits.
“While that doesn’t necessarily mean the underlying economy is booming as most economic data is adjusted for changes in prices, firms would be unable to raise prices unless underlying demand was strong. This suggests that the economy is likely to avoid falling into a recession, at least over the next six months.”
He added: “Overall, we think the UK economy will resemble a seesaw over the next year. On one end will be the recovery in households’ real incomes, driven by falling inflation and a robust labour market. On the other side will be the impact of the huge surge in interest rates that have happened over the last year and a half on households and businesses.
“Over the rest of this year, the positive side is likely to win out, meaning economic growth should improve in Q3 and Q4 after a moribund first half. But as we enter 2024 the negative impact of higher rates is likely to grow heavier. While we think the UK will avoid a recession, we’re expecting virtually no economic growth next year, meaning it wouldn’t take much to tip the balance in favour of a recession.”
The RSM UK Middle Market Business Index is a quarterly survey of 411 senior executives at middle market companies.
