US Start-ups Lagging

Ahead of today’s non-farm payroll report, analysts expect a modest gain of 125,000 jobs, and an slightly higher headline unemployment rate of 8.6%. Part of the reason for the weaker numbers is that many businesses close their doors at the end of the year, and an adjustment totalling 374,000 job losses in each of the last 3 years has been added into the January report. This month’s job loss number is expected to be in the same ballpark, according to The Wall Street Journal.

The formation of new business start-ups has fallen from pre-recession levels by more than 6%. Thus, as companies die, not enough new companies are formed to pick up the jobs lost.

The US added jobs last year, and today’s report is also expected to show that the gains were greater than first estimated. And while that’s good, the job and economic growth has been almost painfully slow, in part because new business formation has slowed.