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In spite of the COVID-19 pandemic, new business applications in the US hit a record for two consecutive years in 2020 and 2021. According to the latest figures published by the US Census Bureau in January, the US had 5.4 million business applications in 2021, 23% higher than the 2020 record of 4.4 million. In December 2021 alone, there were over 418,000 applications.
- Of the 5.4 million applications reported for 2021, 1.8 million are classified as likely employers: new companies who are the most likely to create new jobs when they become operational.
- The construction sector accounts for a large share of these likely employers, with 257,000 startups.
2020 had also been a record year for new businesses, with a 26% increase from the 3.5 million applications reported in 2019. Considering the two-year period from 2019 to 2021, annual business applications in the US increased by 54%. This growth has been largely concentrated in six states, which account for half of startups: Florida, California, Texas, New York, Georgia and Illinois.
New Business Applications by Industry Sector
The Economic Innovation Group has been analyzing monthly data from the US Census Bureau, identifying the industries with the highest growth between 2019 and 2021, based on business applications. As you can see in the table below, the list includes construction and many related sectors:
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| Industry Sector | Business application growth, 2019-2021 |
| Transportation and warehousing | 101% |
| Accommodation and food services | 67% |
| Administrative and support | 55% |
| Finance and insurance | 51% |
| Company management | 49% |
| Information | 39% |
| Professional services | 38% |
| Real estate | 33% |
| Construction | 28% |
| Wholesale trade | 20% |
| Manufacturing | 20% |
New business applications in the construction sector were up by 28% between 2019 and 2021. However, many other sectors in the list have a demand for construction services, or they offer products and services that are used by construction firms.
Business Sectors Leading Job Creation in the US
As stated above, the US Census Bureau classifies many startups as likely employers, and more than 14% of them are in the construction business. Of the 1.8 million business applications by likely employers, construction accounts for 257,000. The following were the top 10 sectors where companies with a high potential for job creation filed applications in 2021:
- Accommodation and food services = 308,000
- Construction = 257,000
- Retail trade = 211,000
- Healthcare and social assistance = 211,000
- Professional services = 203,000
- Transportation and warehousing = 122,000
- Administrative and support = 80,000
- Finance and insurance = 66,000
- Real estate = 49,000
Entrepreneurship is at record levels in the US, in spite of challenges like the COVID-19 pandemic, supply chain issues, and high inflation. There has been debate around the main factors driving the large number of startups, but two causes are very likely: former employees who were laid off during the pandemic are starting their own businesses, and interest rates have remained low (although that is expected to change soon).
