Middle market private companies in the Golub Capital Altman Index (GCAI) grew earnings by 11% during the first two months of the first quarter of 2024. Revenue grew 5% during the same period.

The data indicated that revenue and earnings growth were 1.8% and 4%, respectively, for consumer products businesses; 9.2% and 9.9% for healthcare companies; 8.3% and 25.9% for the technology sector; and 10.7% and 10.6% for industrials.

The Golub Capital Altman Index (GCAI) is produced by private credit asset manager Golub Capital in collaboration with credit expert Edward Altman of the NYU Stern School of Business, and director of research in credit and debt markets at the NYU Salomon Center for the Study of Financial Institutions.

The GCAI, which began collecting data in 2012, compares the median revenue and earnings growth of 110-150 privately held companies in the Golub Capital loan portfolio for the first two months of each calendar quarter to the financial performance of major market indexes such as the S&P 500 and S&P SmallCap 600.

The figures for healthcare and industrials suggest that “well-managed businesses are weathering the ongoing tightness in labor markets,” Altman said, adding that the fourth consecutive quarterly earnings growth in tech is further proof that “mission-critical providers of productivity-enhancing enterprise software remain in high demand in this environment.”

Altman believes the index figures are in line with current consensus expectations of a “soft landing” for the U.S. economy. “That said,” he noted, “we believe investors would do well to focus on strategies designed to perform well across a range of scenarios.

Resilient companies with private equity backing companies are well-positioned even if the pace and magnitude of interest rate cuts fall short of current expectations, said Golub CEO Lawrence Golub.

“The consistent fundamental earnings growth we’ve seen is giving companies valuable flexibility as they manage through this period of high interest rates,” he said. “The strong performance reflected in the GCAI for Q1 2024 offers investors an encouraging sign as they recalibrate their expectations for the trajectory of interest rates in the coming period.”