Report: US entrepreneurial activity on upswing for second straight year

A key indicator of new business creation in the U.S. rose for the second consecutive year after hitting its lowest level in more than two decades just two years ago. That’s a headline finding of the 2016 Kauffman Index of Startup Activity released this week by the Kansas City-based Ewing Marion Kauffman Foundation.

“The latest Startup Activity Index data show entrepreneurship finally recovering, with new business creation reaching close to the peak preceding the Great Recession drop,” Arnobio Morelix, a senior research analyst at the Kauffman Foundation, said in a news release.

The rate of new entrepreneurs increased by more than 15 percent from two years ago, meaning about 330 out of every 100,000 adults have become entrepreneurs each month so far this year, the report says. More than 80 percent of those people were previously employed, suggesting their decision to start a business was driven by “opportunity” rather than “necessity,” according to the report.

Though the startup gender gap remains large, female entrepreneurs are becoming a major driver in the expanding entrepreneurial activity, Robert Fairlie, a professor of economics at the University of California, Santa Cruz, said in the same release. The rate of new entrepreneurs for females grew to 0.26 percent from 0.22 percent, marking the biggest increase in almost 20 years. The rate for males rose modestly, to 0.42 percent from 0.41 percent.

The most likely age group to become entrepreneurs was people between the ages of 35 and 44, the report shows.

Immigrants were a force in new business activity, accounting for 27.5 percent of the country’s new entrepreneurs.

Despite the recent upward trend, current business creation levels are still below levels seen in the 80s, 90s and early 2000s, Kauffman’s indicators suggest.

The full index is available online. An additional report with state and metropolitan data is due out later this month.

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