Employment in New Zealand’s small sized businesses has been booming in previous years - sitting at around 8-10 percent, well above the national growth employment figures of around three percent. This data directly contradicts recent reports on the downturn of business confidence - you don’t hire people if you are worried about your business or what’s going to happen. We are also confident this isn’t false growth driven by a growth in the number of small enterprises as it’s linked to the number of employees per company (or headcount per enterprise).
That being said, the latest Xero Small Business Insights dashboard indicates small business hiring practices may be slowing slightly, although it’s been suggested this could have been more to do with the availability of talent than anything else. The metric is based on anonymised, aggregated data from hundreds of thousands of small NZ businesses using the Xero platform, and provides a snapshot of Kiwi employment trends. Diving in and we can see that -
The latest figures show that for the year to June 2018, there was an overall decrease in the number of New Zealand small business employees, down 1.3 percent. This is an exact decrease on the last reporting period for February 2017 - March 2018. which saw an overall 1.3 percent increase in the number of New Zealand small business employees.
The dip is consistent with the impact of seasonal work but may also reflect national figures that saw New Zealand’s unemployment rate inch higher in the June 2018 quarter, to 4.5 percent. That is the first increase in the jobless number since December 2016 and was higher than the Reserve Bank and the major retail banks’ forecasts.
In the construction industry we saw a 1.8 percent reduction in June 2018, almost a complete reversal of the May 2018 increase of 2.0 percent. The retail industry also followed the overall trend with a 2.9 percent reduction in June 2018. Both the agriculture and professional services sectors bucked the trend though, albeit only slightly, with increases of 0.1 percent and 0.4 percent respectively.
According to independent economist, Cameron Bagrie, the turbo charged rates we have seen previously with annual employment growth can be hard to sustain.
“Xero Small Business Insights shows that employment growth is softening, though it’s from a gallop to a canter. Annual growth in employment has now dipped below 8 percent for two months in a row. Annual growth in the number of employees per organisation has slowed too. However, we need to be careful making sweeping judgements. Those sort of employment figures are very robust. The official HLFS employment figures show employment is up 2.9 percent on last year so small businesses are still doing a lot of the employment growth heavy lifting.”
Overall, New Zealand businesses’ hiring behaviour is still reasonably strong but there is a slowing that needs to be watched. It’s important to listen to the specifics though, slowing is not a downturn and if we continue to give airtime to that narrative , it’s not only inaccurate but we run the risk of talking ourselves out of business happiness.
This article was prepared by Xero using Xero Small Business Insights data, for the purpose of informing and developing policies to promote small business in New Zealand. It contains general information only and should not be taken as taxation, financial, investment or legal advice. Xero recommends that readers always obtain specific and detailed professional advice about any business decisions.