Last Friday's employment report was strong, with the economy adding 248,000 workers, and the prior two months' data revised up an additional 75,000. New business formations are still running at 65,500+ per month, and both continue to be quite bullish. The unemployment rate remained steady at 5.6%, with more workers entering, or re-entering, the workforce. The 700,000+ new businesses created since February are predominantly in the service sectors (82%), followed by construction and manufacturing.

I recently saw a report by Schonfeld & Associates that uses IRS data to create financial ratio reports. These kinds of reports are interesting because people must comply with the data gathering process, rather than volunteer, as they do in surveys. The data are compiled from a sample of income tax returns.

The chart below shows the percentage of profitable and unprofitable firms in the Printing and Related Support Activities industry. Overall, only 52% of our industry's firms were profitable, and the average industry profitability was 2.7% for the period. How could the industry have so many losers? Since so many are small businesses, it is possible that everything possible was done by C corporations to minimize the bottom lines to avoid the double-taxation of having both a corporate tax and personal tax. Being an S corporation avoids that, but there are many benefits to being a C corporation in terms of tax treatment of medical benefits and other areas. Even so, few firms actually throw themselves into losses but would minimize their profits. So this is more likely an issue with the smallest businesses and less of an issue with the larger ones.