Wellington — 26 August, 2021 — Xero, the global small business platform, today released its Xero Small Business Index for July 2021, showing New Zealand small business sales rose a healthy 6.6% year-on-year (y/y) (adjusted) in July 2021, while jobs grew 5.3% y/y.
Xero’s Managing Director for New Zealand & Pacific Islands, Craig Hudson, says the consistency of New Zealand’s small business economy during the last few months is a strong indication of recovery.
“The July result highlights the consistency of the New Zealand recovery to date. Even sectors that have taken longer to rebuild, such as hospitality, have been able to maintain several months of positive sales growth which is now translating into jobs growth,” says Hudson.
However, Kiwis will be anxiously waiting to see what the impacts of the August 2021 Alert Level Four lockdown will be for the small business economy.
“The decision to move into Alert Level Four last week will impact the small business economy across all industries, particularly for hospitality and retail which were hit hardest last time we went into lockdown,” says Hudson.
“However, unlike 2020 when lockdowns were new to everyone, this time around we can point to data from Australia’s recent lockdowns to get an idea of how the small business economy might react in New Zealand.”
Australian small business economy slows under lockdowns
By the last week of July more than 50% of the Australian population was living under stay-at-home orders as the Delta strain of COVID-19 spread.
Restrictions in Greater Sydney (in NSW) covered the whole of July, impacting almost 25% of Australia's population, with Victoria (15-27 July) and South Australia (20-27 July) also moving to stay-at-home orders during the month.
Over the month, sales growth for Australian small businesses slowed to 2.9% y/y, a drop from the 11.2% y/y figure recorded in June.
Australian small business jobs rose just 2.6% y/y in July 2021. This marks a significant softening in jobs growth compared to June (+4.4% y/y) and May (5.9% y/y) and is the slowest jobs growth since February 2021.
“Looking at Australia’s job growth, it’s clear lockdowns have an impact. For example, small business job growth was recorded at 0.4% y/y in New South Wales in July and 2.7% y/y in Victoria, with both states affected by lockdowns. In contrast, Western Australia saw jobs increase by 6.7% y/y,” says Hudson.
“It’s clear from what’s happened in Australia that the lockdowns will have an impact on the small business economy. The return of the New Zealand wage subsidy scheme is a welcome support platform and will help eligible small businesses retain and support their employees through this lockdown period.
“It will also help them manage the decline in sales over the lockdown period as there are still a number of fixed costs that small businesses will need to cover.
“Once we’re back to relative normality, it falls to us again to ensure we buy from local small businesses where we can to help circulate money in our community’s economy and keep store fronts open and people employed. Please help our small businesses through these tough times.”
July small business sales stable
In July, New Zealand’s small business economy was showing consistent signs of recovery. Small business sales rose a healthy 6.6% y/y in July 2021, after a strong 11.9% y/y rise in June.
“We saw the retail sector was the strongest performing sector for the third month in a row, delivering sales growth of 11.5% y/y (compared to +15.8 y/y in June and 9.6% y/y in May),” says Hudson.
“It’s also encouraging to see the hospitality sector continue its recent run of above-average sales growth, up 9.5% y/y in July - the fifth consecutive month of positive growth.”
While both down from their June highs, manufacturing (+8.9% y/y) and construction (+7.3% y/y) also delivered solid growth.
Jobs continue to grow
In July, small business jobs rose 5.3% y/y, marking the third month in a row of jobs growth exceeding 5% y/y.
“Looking across the industries, job gains were seen in manufacturing (+8.1% y/y), professional services (+7.7% y/y) and construction (+7.2 % y/y),” says Hudson.
“Retail trade (+6.0% y/y) also performed well, although this was slightly slower than its recent monthly results of +6.8% y/y in June and +7.1% y/y in May. 2
“Pleasingly, the hospitality sector recorded its first positive jobs growth since the pandemic hit, rising 0.3% y/y in July after declining in June (-0.7% y/y).”
Small Business Index remains well above average
The Small Business Index recorded another strong month, down just five points in July 2021 to 122 points from a record high of 127 in June 2021.
“Looking at the small business economy in July, it’s clear Kiwis were making an effort to support local business owners and their communities. While the Index fell slightly, we’re still tracking well above average,” says Hudson.
“With New Zealand going back into Alert Level Four lockdown in August, we need to take all the lessons we learned from 2020 to recover as quickly as possible.
“Short, sharp lockdowns are essential to getting businesses doors back open, while purchasing locally where possible will help small businesses recover and get back to the levels of growth we’ve seen in recent months quickly.”
Natalie Benning | firstname.lastname@example.org | 021 026 19604
Xero is a cloud-based accounting software platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time 3 financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.
About Xero Small Business Insights
The Xero Small Business Insights (XSBI) program provides analysis of the sector’s health, with metrics based on anonymised, aggregated data drawn from hundreds of thousands of subscribers in partnership with AlphaBeta Australia (part of Accenture). 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.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.
Note to the editor
Previous iterations of the XSBI data have listed snapshots of data from the time it was captured. Some of these historical data points change as bookkeepers and accountants finalise their clients’ accounts, which can impact the specifics of the percentages.
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