A record-breaking 6,944 Connecticut businesses closed in the first half of the year, the largest number of companies to call it quits since the state began keeping records in 2000, according to data released Monday by Secretary of the State Susan Bysiewicz.
Business failures in the first six months were up 17 percent over the same period last year. If the trend continues, this year's business failures could exceed last year's record, a dismal 12-month period in which 13,456 Connecticut businesses closed, the largest number of shutdowns since 2000.
Still, there was some room for optimism in the results. "While 2009 may yet set the record for most business failures, it appears the severity of both the number of closures and the decline of new business start-ups is lessening," Bysiewicz said.
In the first three months of this year, 3,477 firms closed. From April through June the number totaled 3,467.
"The fact that we saw a few less failures in the second quarter — we're hoping that's a bottoming out and we have turned the corner," Bysiewicz said.
Businesses that register with the state aren't required to specify what kind of commerce they engage in, but the consensus is that few industries have been spared. The recession has forced a wide range of firms to cease operating.
"They don't break down what types of companies they are, but I wouldn't be surprised to see a lot of Realtors, construction companies, boutique financial firms and retailers closing. Those industries really got hit hard, " said Peter Gioia, who tracks the economy for the Connecticut Business & Industry Association.
During the first half of the year, the number of new business starts was roughly flat. From January through June, 13,878 new businesses incorporated, down 9.6 percent from the same period last year. And many of those new business starts are initiated by individuals forced into self-employment. Connecticut has lost 70,000 jobs since the beginning of the current recession. Donald Klepper-Smith, chief economist for DataCore Partners LLC in New Haven and chairman of the governor's council of economic advisors, said he expects business failures to rise in the second half of the year.
In the early stages of a recovery, "business activity comes back in nickels and dimes." Those small gains, he said, may not be enough to rescue an over-leveraged business.
Reprinted with permission of the Hartford Courant.
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