New Business Starts Hold Steady as U.S. Job Market Sends Mixed Signals

New economic data shows startup momentum in the United States is holding steady, even as the labor market shows signs of strain. The latest Business Formation Report from Registered Agents Inc (RAI), shows new LLC and corporate filings are on the rise, a sign Americans are still starting businesses despite economic uncertainty. Business formations are often seen as an early signal of economic confidence, capturing small business activity before companies hire or generate revenue. By that measure, confidence remains high.

January recorded 556,009 new business formations nationwide, followed by 535,310 formations in February. Combined, the numbers show an 8% increase from the same two months in 2025. The data continues a trend that started more than a year ago and suggests laid-off workers are increasingly turning to self-employment, consulting, and small startups as an alternative to traditional jobs.

Registered Agents Inc is the largest registered agent provider in the U.S., helping millions of entrepreneurs start new businesses and establish a professional online identity. The company was the first to use its extensive internal data to deliver real-time insights into the small business economy through its monthly formation report.

“In many cases, layoffs forced people to make a decision,” said Molly Cavanah, Registered Agents Inc VP of Data and Revenue Growth. “Either try to find a new job, or make your own. And the numbers show a lot of them chose to create the job that works best for them.”

But as formations are climbing, the job market itself is showing signs of cooling.

Private employers added 63,000 jobs in February, a modest rebound and the strongest monthly gain since mid-2025, according to the ADP National Employment Report. Hiring was concentrated in a few sectors, including construction and health services, while wage growth remained slow, but steady.

However, federal data tells a weaker story. The U.S. economy lost 92,000 jobs overall in February, while the unemployment rate held steady at 4.4%, according to the Bureau of Labor Statistics. Job losses were driven in part by declines in healthcare, information, and government employment.

Healthcare accounted for 28,000 of those losses, according to the Bureau of Labor Statistics’ Employment Situation Summary. This is a reversal from January, when the same sector added 77,000 jobs. For much of the past year, healthcare functioned as the labor market’s last reliable economic pillar, adding jobs as most other sectors stalled or contracted. February marked the first time healthcare joined the contraction. Much of this decline may be driven by strike activity, however, and could reverse as workers return.

Government employment, by contrast, showed more concrete losses. Federal government employment decreased by 10,000 jobs in February according to the same Bureau of Labor Statistics report. The decline follows a peak in October of 2024, losing 330,000 jobs, or 11% of its total workforce, since that high. Federal employment, unlike healthcare, shows no clear signs of a reversal, and instead points to something more permanent than a single bad month.

This is where the divergence between job creation and business formation is clear: in the same month that the government and healthcare sectors shed 92,000 jobs, more than 535,000 new businesses were created.

Together, the data points to an economy in transition.

Hiring is uneven and slowing in some sectors, yet business formation activity suggests many Americans remain optimistic enough to strike out on their own. That divergence may reflect a broader shift, with workers turning to entrepreneurship as traditional job growth slows. Many new ventures are small online businesses, consulting firms or freelance work, often launched by workers looking for flexibility or income after layoffs.

For now, the economy appears to be balancing between resilience and caution, but the formation numbers suggest many Americans have made up their minds to fill the gap themselves.