Start-up activity plummeted in the first half of 2010 as would-be entrepreneurs were either scooped up by employers or scared off by fragile economic conditions, a tight lending market and uncertainty over the sustainability of the recovery, a study said.

Results of a survey released today show that an average of 3.7 percent of job seekers opted to start their own business in the first half of 2010. That was down from 7.6 percent in the first half of 2009 and the 9.6 percent start-up rate averaged during the last two quarters of 2009, outplacement firm Challenger, Gray & Christmas Inc. said in a news release.

The 3.4 percent start-up rate in the first quarter and the 3.9 percent rate in the second quarter represent the lowest two-quarter average on record, Challenger said. The highest two-quarter average on record occurred in the first half of 1989, when 21.5 percent of job seekers ended up starting a business. Challenger has been tracking start-up data since 1986.

In the latest reading of small business confidence conducted by the National Federation of Independent Business (NFIB), the optimism index fell to 89 in June from 92.2 in May. The NFIB optimism index found that a net of just 1 percent of small firms are planning to hire in the coming months.

The latest figures on self-employment from the Bureau of Labor Statistics bear out the Challenger survey. Seasonally adjusted data show that after the number of self-employed reached a pre-recession peak of nearly 9.8 million in June 2007. That number had dropped 9 percent as of June.