Medium-sized businesses outperformed the rest of the UK economy last year, according to new research that aims to provide more regular data on the country’s small and mid-market corporations. 

Mid-market businesses were the fastest growing in terms of output for three months to December, according to the first NatWest Mid-market Growth Tracker, produced with the help of S&P Global from the surveys it carries out for its closely followed purchasing managers’ index (PMI) surveys.

The newly forged mid-market business activity index rose to 53.3 in December from 50.3 in November, with growth driven by service sector sales. Mid-sized firms are those with at least 250 employees, while the index threshold of 50 separates growth and contraction. 

Taking into account smaller businesses with fewer employees, small and medium-sized enterprises (SMEs) as a whole saw flat growth in the fourth quarter of 2024, which the report said was largely due to a downturn in manufacturing output, with an average of 50.1 over the quatyer ending with a low of 48.7 in December.

Amid these growth trends, businesses raised prices to cope with rising input costs. 

The fastest rise in input prices for eight months was reported by mid-market firms, driven by strong wage pressures and higher nd purchasing costs, which most businesses looked to cover with their own price rises, 

Launching the report, NatWest noted the recently published report ‘The Critical Middle’ “highlighted the lack of regular trackable data surrounding mid-market businesses” and so this survey is the bank’s response.

It aims to provide an ongoing view of mid-market sentiment and business performance across the UK.

The report highlighted that the mid-market service sector rebounded after having stagnated in November, while December saw the first drop in manufacturing production at mid-market firms since last April.

The SME manufacturing production index showed a marked downturn to 41.1, while service sector activity was broadly unchanged (49.9) and construction output increased marginally (50.2).  

NatWest’s chief economist, Sebastian Burnside, said: “Mid-market firms were the standout performers of 2024, proving themselves to be significant growth drivers for the UK.

“These firms ended the year in solid growth territory, with strong sales in the service economy boosting their performance and offsetting lower manufacturing output.”

He noted that SMEs found the final quarter more challenging, with business activity falling to its lowest level in over a year, reflected the manufacturing downturn, which he said has “keenly felt the impact of lower demand and rising costs”.