July 2024
Small Business Checkpoint: Having fun is serious business
Service-based small businesses’ profits are higher than both the 2019 average and overall trend, though payroll growth is slowing.
Key takeaways
- New business formation remains historically strong, up 28% from the 2019 average. Among applications from businesses likely to have payrolls, the accommodation and food services industry's application levels in May were almost 50% higher than the 2019 average.
- The rise in lodging and restaurant business formation is due in part to strength in consumer spending in services. Bank of America internal data indicates small businesses within services have maintained higher deposit balances than the overall trend, and leisure firms' average inflow-to-outflow ratio, which we view as a proxy for profits, continues to be above 2019 levels.
- Business expansion also means more hiring activity. Using Bank of America internal data, we find both restaurants and bars as well as lodging have payroll payment levels more than 40% above the 2019 average. Yet, a moderating labor market has cooled some momentum in hiring, and year-over-year payroll payment growth in services declined in June.
Read our full analysis for a more in-depth look at these trends.
Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.
