Publicly listed companies may get all the glory, but a recent study shows that midsize businesses are the U.S. economy's real growth engine.  

Companies in the U.S. middle market grew revenues at a rate of 6.6 percent during the 12-month period ending June 30, 2014, outpacing the S&P 500 sales growth of 3.4 percent during the same period.

Businesses in this segment are defined as companies with revenue between $10 million and $1 billion, according to a survey from the National Center for the Middle Market, a partnership between The Ohio State University Fisher College of Business and GE Capital.

"We continue to see that if you want to drive growth in the U.S. economy, you find it in the middle," says Tom Stewart, executive director of the National Center for the Middle Market. "This is where organic growth happens. Up at the top end, the organic growth curve starts to flatten out and you start to see more M&A."

During the second quarter of 2014, 44 percent of U.S. middle market companies said they employed a larger workforce compared to one year ago, while 46 percent expect to hire additional workers during the next 12 months, according to the survey.

So are these companies investing heavily to create new jobs?  

Not yet. While mean employment growth rose from 2.6 percent a year ago to 3.2 percent during the second quarter of 2014, saving and spending patterns for middle market companies remain flat year-over-year. Roughly 37 percent of companies continue to hold cash or invest in short term financial instruments rather than invest in capital expenditures or additional personnel.

"That can't go on forever," Stewart says. "If they're holding the line on capital and holding the line on labor but blowing away the top line, there's a certain point in which you can't have all three of those."

Survey respondents cited the cost of healthcare, the ability to grow revenue and the cost of doing business as the three most significant barriers to growth during the next 12 months.

"The cost of healthcare will continue to be a major issue, because it's very high, but I think it's too early to know what effect the Affordable Care Act is going to have on the structure and costs of healthcare for middle market companies," Stewart says. 

Other key challenges to middle market companies include the ability to maintain margins and the uncertainty of how government actions will impact business.

Middle market companies expect revenue growth to rise to roughly 5.8 percent during the next 12 months, compared to 4.5 percent as of the end of the first quarter.

Check out the infographic below for more stats from the National Center for the Middle Market, which includes data from roughly 1,000 CEOs, CFOs and other executives of U.S. middle market companies.


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