Business Growth

How are we doing?

Establishment Growth Rate (2014)

Business growth in Tucson ranked last out of 12 western Metropolitan Statistical Areas (MSAs) with a decline of -0.2% in 2014. While business growth was negative it was an improvement over the substantial declines during 2008 (-2.1%) and 2009 (-3.4%), which reflected the Great Recession. Business growth, or the growth rate in total establishments, has been negative since the Great Recession.

Why is it important?

The change in the total number of establishments reflects the dynamism of the local economy, as well as the overall ups and downs associated with business cycles. Local areas with strong business growth may generate correspondingly strong gains in jobs and income that contribute to increases in the standard of living and the tax base.

How do we compare?

In 2014, leisure and hospitality generated the most establishments in the Tucson MSA (34), followed by education and health services (27); and information (5). Construction and financial activities generated far fewer establishments. Losses in manufacturing and natural resources and mining reflect, in part, the capital-intensive nature of these sectors, which make industry entry and exit relatively expensive.

What are the key trends?

Tucson MSA business growth, at -0.2% in 2014, ranked last out of 12 MSAs in the western U.S. Tucson’s business growth rate underperformed the state’s rate of 1.3% and the national rate of 1.0% during 2014. Business growth remains well below pre-recession levels for the state of Arizona and Tucson MSA.

How is it measured?

Business growth reflects changes in the number of establishments. An establishment is a single physical location at which business is conducted or services or industrial operations are performed. It is not necessarily identical with a company or enterprise, which may consist of one or more establishments. When two or more activities are carried on at a single location under a single ownership, all activities generally are grouped together as a single establishment. The entire establishment is classified on the basis of its major activity and all data are included in that classification.

Estimates for the number of establishments come from the County Business Patterns (CBP) while estimates of business starts, expansions, contractions, and closures come from Statistics of U.S. Businesses (SUSB). Both are annual datasets maintained by the U.S. Census Bureau and extracted from the Business Register. These datasets cover businesses that generate most of the country's economic activity. The data exclude non-employer businesses, private households, railroads, agricultural production, and most government entities.