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Posted at 06:00 AM ET, 04/18/2013

Start-up activity dropped in 2012, but is still above pre-recession levels

An average of 0.3 percent of the U.S. adult population — approximately 514,000 people — created new businesses each month in 2012, a new report showed.

The total represented a 6.32 percent decline in new businesses from 2011, when 0.32 percent of the population created new businesses, according to the Kauffman Index of Entrepreneurial Activity tabulated by the Kauffman Foundation, a Kansas City, Mo.-based entrepreneurial research group. About 543,000 people started businesses each month in 2011.

The decline could be a result of “improving labor market conditions putting less pressure on individuals to start businesses out of necessity,” the report said.

Despite the drop, the index is slightly higher than pre-recession levels of 0.29 percent in 2005 and 2006, and is equal to that of 2007. Immediately after the economic downturn in 2008, entre­pre­neur­ship levels spiked, reaching 0.34 percent in 2009 and 2010, the report said.

Between 2011 and 2012, the rate for men fell from 0.42 percent in 0.38, while the rate for women remained constant at 0.23 percent. The current rate for women, however, is lower than the 2009 recession peak of 0.25.

Immigrants to the United States were almost twice as likely as U.S.-born entrepreneurs to start businesses in 2012, though the immigrant entrepreneurial rate fell from 0.55 in 2011 to 0.49 percent 2012.

The construction industry had the highest rate of entrepreneurial activity in 2012, with 1.43 percent of adults in the industry starting businesses, followed by the services industry at 0.41 percent.

The index was based on population data from the Census Bureau and the Bureau of Labor Statistics, and only counted adults who did not already own businesses. People who started side businesses weren’t counted if they worked more hours on another job.

By  |  06:00 AM ET, 04/18/2013

 
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