The rebound in the number of new manufacturing businesses since early 2020 has served as a powerful testimony to the strength and flexibility inherent to the manufacturing sector and capitalism. Not only have new business formations proven the flexibility of a free and open economy to overcome adversity, but also the ability of aspirational individuals and teams to create firms and ultimately jobs. The U.S. Census Bureau identifies the monthly number of new business applications with a high propensity of turning into a business with a payroll based on various factors as “High Propensity Business Formations” (HBA). 

Prior to the start of the pandemic in March of 2020, the number of new high propensity manufacturing businesses being formed had trended lower starting as early as 2H2018. The timing of the decline in new formations was consistent with the simultaneous decline in the Gardner Business Index (GBI). This pre-pandemic decline, however, may have better prepared the industry for what was to come. Between February and April new manufacturing business formations fell 12.7% while total formations during the same time fell substantially more with a 28.7% decline. This precipitous drop was short lived as new applications spiked by July at double the rate from April. 

Manufacturing high propensity business formation applications filed in the United States since July 2020 have been almost 1/3^rd higher compared to the average number of formations recorded in the years leading up to the pandemic.

Compared to pre-pandemic levels going back to 2015, the average number of monthly new applications for manufacturing businesses has been approximately one-third greater since July 2020. Strong economic growth, low borrowing costs, and eager consumers have provided plenty of opportunities for new firms of all kinds to flourish. This recent trend also creates a ripe opportunity for providers of machine tools and manufacturing products to expand their client base and market share.