The Xero Small Business Insights (SBI) data for July showed New Zealand small business continued to steadily rebuild in July. Since April’s Alert Level 4 lockdown, we’ve seen a steady upward trend during May and June across both small business revenue and employment figures. The data from July has begun to level out and return to close to the numbers from 2019.
Encouragingly, small businesses continued to hire in July with a 0.8% monthly rise in jobs. This rise comes after jobs fell in the latter half of June, potentially as small businesses adjusted to the new Wage Subsidy Scheme criteria.
Small fall in revenue after earlier gains
Small business revenue was down 1.8% compared to July 2019. This followed a strong June result, when revenue rose to be 4% higher than in June 2019. It is important to remember these figures are an average representation though, as it’s clear that a number of businesses across different industries and regions are still suffering from the economic impact of COVID-19.
Looking at different industries, many showed an increase in revenue in July. Revenue for both hospitality and retail were up 6% compared to a year ago, and the manufacturing sector recorded a 13% growth in revenue year-on-year. These results could reflect pent up spending demand as New Zealanders emerged from lockdown, as well as a returning level of confidence in spending locally in shops and restaurants as the country almost completely removed health restrictions.
On the other hand, the professional services sector took a hit, down 17% year-on-year.
From a regional perspective, the ongoing closure of the international border to non-NZ residents continued to hit Queenstown hard. Year-on-year, small business revenue in the city during July was down 12.8%.
Employment figures remain varied across industries
While the hospitality industry has recorded some strong gains in revenue, this isn’t being reflected in the employment rates. Compared to the first week of March (pre-COVID), hospitality jobs were down 8.5% at the end of July.
It was similar in tourist hotspots, with employment figures in Queenstown still down significantly - 5.7% between the beginning of March and the end of July.
The real estate and professional services sector also saw employment fall during this period, with jobs dropping by 4% and 3.2% respectively.
In positive news though, retail jobs increased 2.2% by the end of July, reflecting the need for more employees in stores as people begin to embrace their freedom from lockdown and start shopping locally again.
Overall, this month’s data shows the road to recovery will be bumpy, with upcoming August data set to reveal how small businesses cope with Auckland’s second lockdown.
For further information on the July metrics please refer to the Xero SBI Update.
About Xero Small Business Insights
The Xero Small Business Insights program provides analysis of the sector’s health, with metrics based on anonymised, aggregated data drawn from hundreds of thousands of subscribers. The result is a picture of business conditions that’s more accurate than most private surveys, which have a far smaller sample size, and more frequently updated than other New Zealand data on small business. Xero is currently producing a series of specialised monthly metrics which analyse the impact of COVID-19 on the small business sector.