Latest Counts of Business Establishments Show Which Sectors Hit Hardest and Survived the Depth of the Recession
Tuesday, July 26th, 2011
Every year, the Department of Commerce and the Bureau of Labor Statistics publish data called County
Business Patterns. These are among the best data about the number of business establishments that one
can get, because they are compiled from Social Security tax records filed on Form 941. (These data
do not include businesses without employees who pay their Social Security tax with their income tax;
those are covered in a different report, Nonemployer Statistics, which we will discuss in an upcoming
Unfortunately, when County Business Patterns data are released, they are somewhat out of date. The
2009 data were just published. Ordinarily, this is not a problem during typical economic times.
The problem is compounded by the data's baseline week. Every County Business Patterns report is
based on the number of establishments and employees for whatever week includes March 12. In the
case of 2008 data, we were not officially in a recession. That is, we actually were, but did not know it
yet. The start of the recession was pegged by the National Bureau of Economic Research in December
2008. This mean that at the time of their meeting, a recession was declared almost a full year after it
had actually started.
We also know that the recession bottomed in June of 2009, also determined by the NBER.
This means that because the 2008 County Business Patterns data were collected close to recession start,
and the 2009 data were collected close to the beginning of the recovery, we can compare how some
sectors did compared to others.
The table below shows the data for all establishments. Between the publication of the 2008 and 2009
data, there was a net change down of -167,704 business establishments, about -2.2% of the total.
Ignoring businesses that were not classified to a sector, health care and social assistance grew, and
were up +8264 in establishments, for a percentage increase of +1%. Utilities were +352 establishments
(+2.1%) and educational services were +199 (+0.2%). The rest of the sectors were down. The worst
in terms of number of establishments were construction (-60,636, -7.8%), retail trade (-24,298 -2.2%),
manufacturing (-17,282, -5.3%), real estate and rental and leasing (-14,615, -4%), and finance and
insurance (-12,998, -2.6%). The table below show data for these and other industries.
County Business Patterns have data for many employee size ranges of establishments; because of
space limitations, we cannot include all of them here. Establishments with 50 or more employees are
only 5% or all businesses. These larger businesses declined disproportionally to their number: they
represented 15% of the decline in the number of establishments. The data show that among businesses
with 50 or more employees, that construction lost -18.8% of those establishments, followed by a -
11.9% of administration and support and waste management and remediation services businesses, and
-11.2% of manufacturing businesses. On average, the number of business establishments with 50 or
more employees fell by -6.4%, when the overall total of all establishments fell by -2.2%. The number
of health care and social assistance establishments with 50 or more employees grew by 2.1%
Our analysis of microbusinesses, proprietorships, and other non-employee businesses will be provided
soon after the data are released.
In the meantime, Friday, July 29 is a critical day for economic data, with the release of Q2-2011 GDP
and revisions going back five years. We'll report on that next week.