Golub index numbers are good news for US mid-markets

Private lender's index, report offer hope for macro 'soft landing' as pressures abate.

In October and November 2022, mid-market private companies in the US saw both revenue and profit grow beyond expectation across all four sectors tracked by the Golub Capital Altman Index.

The Golub Capital Middle Market Report called the numbers a “positive surprise” because growth exceeded inflation, encouraging hopes that the US Federal Reserve’s anti-inflation measures may yet be compatible with a “soft landing”.

The four sectors tracked by GCAI are: industrials, consumer, healthcare and technology. In the October 2022 report (reflecting the numbers from July and August), the industrial sector was the only one of those in which earnings grew. Tech companies at that time showed an earnings decline of 3.2 percent year-on-year.

In the new report, by contrast, all sectors are up YOY, whether revenue or earnings is considered. The healthcare sector had the most anemic earnings growth (1.3 percent). The other sectors showed impressive YOY rises of 14.3 percent tech, 11.4 percent industrials 11.4 and 9.2 percent consumer.

The aggregate is 9 percent YOY earnings growth and 11 percent YOY revenue growth.

Golub produces the GCAI from its own portfolio of between 110 and 150 companies, in collaboration with credit expert Edward I. Altman. It is the longest-running index based on actual revenue and earnings for mid-market companies.

A statement announcing the results quoted Altman: “The strength in the Consumer sector and Industrials sector earnings suggests supply chains are getting back to normal and pressure from higher energy costs is abating. That said, we are still seeing the impact of rising wages in labor-intensive sectors, notably Healthcare.”