Business Formation Statistics, as of July 2021
Overall, there is generally positive news regarding business applications and business formations. However, there are some important differences by geography and industry type.
Business Applications: Business applications were up 1.2% compared to June 2021, and reached 454,460. As a reminder, business applications describe the business applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of the IRS Form SS-4.
Geography.
Growth was highest in the Northeast and West and significantly lower in the Midwest and the South.
The Northeast (+5.3%) and West (+5.1%) experienced significantly higher growth rates than the Midwest and the South.
Business apps in the Midwest remained relatively flat (+0.2%), while in the South growth was negative (-1.2%).
Industry.
The industries experiencing double-digit growth were utilities (+13.1%) and mining (+10.5%). The construction industry was next highest in growth at +5.9%.
Single-digit positive growth in the Information (+4.4%), Educational services (4.1%), Professional services (+3.7%), and Finance and Insurance (+3.3%) industries.
Positive but less growth in Agriculture (+2.9%) the Arts and Entertainment sector (+2.0%).
The least amount of growth occurred in several sectors including Health Care and Social Assistance (+1.5%), Administrative Support (+1.0%) Management of Companies (+0.9%), Real Estate (+0.8%), Transportation and Warehousing (+0.2%).
Negative growth in Retail Trade (-3.3%) and Manufacturing (-0.2%).
Business Formations. Projected business formations (within 4 quarters) for July 2021 were at 33,712, an increase of 2.1 percent compared to June 2021.
Reminder: Business formations describe employer business formations as indicated by the first instance of payroll tax liabilities for the corresponding business applications.
Note that projected business formations are forward-looking, providing an estimate of the number of new business startups that will appear from the cohort of business applications in a given month. It does not provide an estimate of the total number of business startups that appeared within a specific month. In other words, the Census Bureau is projecting that 33,712 new business startups with payroll tax liabilities will form within 4 quarters of application from all the business applications filed during July 2021. The 2.1 percent increase indicates that for July 2021 there will be 2.1 percent more businesses projected to form within 4 quarters of application, compared to the analogous projections for June 2021.
,
The Census projects higher business formations witing 4 quarters in the Northeast (+4.6%), followed by the West (+2.9%), Midwest (+2.8%) and then the South (+0.4%).
Prepared by Preference Analytics. www.preferenceanalytics.com
admin email: maggie@preferenceanalytics.com
Source: US Census, Economic Indicators Division, Business Formation Statistics
https://www.census.gov/econ/bfs/pdf/bfs_current.pdf
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