Applications to start new U.S. businesses fell in February even as economic activity picked up amid an improving public health situation, government data showed on Wednesday.
The Commerce Department said business applications decreased 13.4% to a seasonally adjusted 423,095 last month. The data is derived from business applications for tax identifications.
There were a seasonally adjusted 48,749 applications from corporations, down 10.4% from January. Applications for businesses with planned wages totaled 51,071, a decrease of 12.9% from the prior month. Overall, business applications fell in all four regions last month and were across all industries.
The COVID-19 pandemic has decimated businesses in the services sector, especially restaurants and bars, leaving millions unemployed. Additional fiscal stimulus, declining new cases and a faster pace of vaccinations have allowed many businesses to reopen, boosting consumer spending and hiring.
Based on the February data, the Commerce Department’s Census Bureau, which compiles the data, projected about 31,153 new business startups with payroll tax liabilities would form within four quarters of application, down 13.2% compared to the estimates for January.