The U.S. small business economy is splitting along sector lines, according to new reports from PYMNTS Intelligence and TD Economics published in May 2026. Healthcare, professional services, and construction are growing, while retail and wholesale businesses are shrinking. The old assumption that “small business” means one thing no longer holds up.
A TD Economics report published May 5 found that healthcare and social assistance establishments grew by roughly 111,000 over the 12 months through Q3 2025, accounting for nearly half of all new small businesses created during that period. Professional, scientific, and technical services also surged, with business applications in that sector jumping 34%.
Retail and wholesale trade, on the other hand, saw net business closures. TD Economics pointed to tariff uncertainty, weaker consumer demand, and rising costs as drivers.
Separately, a PYMNTS Intelligence report released during Small Business Week described a broader split in the small business economy. Businesses generating more than $1 million annually reported year-over-year growth exceeding 13%, while those earning under $150,000 grew less than 1%. PYMNTS concluded that “America’s small business economy is no longer evolving evenly.”
The practical takeaway for small business owners is straightforward. Lenders, insurers, and service providers are likely to start differentiating more sharply by industry. A healthcare startup and a neighborhood clothing store may look similar on paper, but their risk profiles and growth outlooks are moving in opposite directions.
Owners in contracting sectors, especially brick-and-mortar retail, should be prepared for tighter lending terms or more questions from banks. Those in growing fields like healthcare and professional services may find new doors opening for capital and partnerships.
TD Economics also flagged that very small firms with fewer than 10 employees have been reducing payrolls, while mid-sized firms continue hiring. That adds another layer to the divide, beyond just sector performance.
Business owners should keep an eye on how these trends play out in the second half of 2026, particularly as energy prices, tariff policy, and interest rates remain in flux. Understanding where your industry sits in this landscape could shape decisions about expansion, borrowing, and hiring for the rest of the year.
