Media releasePublished on 05 March 2024

Kiwi small business sales fall while job growth continues

Small businesses continue to attract talent despite modest pay rises

Wellington — 5 March, 2024 —Xero, the global small business platform, today released its Xero Small Business Insights for the December 2023 quarter, which showed New Zealand small business sales fell and wage growth slowed, while jobs growth remained strong.

Sales have hardly grown in the past four months, falling 0.2% y/y in September, rising 1.0% y/y in October and were flat in November.

Using the Consumer Price Index (CPI) as a proxy for prices, and adjusting this nominal XSBI data to real data, shows small businesses have been selling fewer goods and services than they were a year ago, for 13 of the past 14 months.

Xero Country Manager, Bridget Snelling, says the weak sales growth is discouraging but not unexpected as high interest rates and ongoing cost of living pressures put financial strain on New Zealanders.

“This is undoubtedly a tough economic climate, making conditions difficult for small businesses in every sector across New Zealand.”

For the month of December, only Otago (+1.9% y/y) and Hawke's Bay (+2.5% y/y) recorded a rise in sales, while Taranaki (-10.8% y/y) had the largest fall. Regional sales growth for the quarter was led by tourism-focused Otago (+2.5% y/y), with Wellington sales dropping to -1.1% y/y, marking three consecutive months of decline for the public-sector led region.

Over the quarter, sales were down in manufacturing (-2.7% y/y), construction (-2.5% y/y) and agriculture (-2.2% y/y). The largest gain for the three months to December was other services[1] (+1.5% y/y). Despite the usually busy Christmas period, retail sales fell 3.6% y/y in the month of December, as financial strain continued to impact Kiwi household spending.

“In challenging times small businesses need to make every dollar count. It’s crucial for small business owners to know their numbers so they’re empowered to make good business decisions and stay on top of their cash flow,” says Snelling.

When looking at international comparisons, New Zealand’s 1.9% y/y sales decline for the month of December 2023, was behind Australia (+0.9% y/y) and the UK (-1.0% y/y) over the same period.

Wage growth well below average

Wages growth slowed to 2.8% y/y in the December quarter, down from 3.4% y/y in the September quarter. This is the smallest quarterly wage rise since the September quarter of 2020.

In contrast, economy-wide data from Stats NZ shows private sector wages rose 3.9% y/y in the December quarter, revealing wage rises for small business employees lag behind the national average.

“Although easing wage growth may come as a relief for employers struggling to keep up with demand, this economy-wide data suggests that small businesses are starting to fall behind larger businesses when it comes to pay increases, putting them in a vulnerable position to hire talent,” says Snelling.

There was little variation in wages growth across industries, with manufacturing, construction and hospitality all experiencing +3.1% y/y growth in the December quarter, and the two outliers being agriculture (+1.8% y/y) and retail trade (+2.3% y/y).

The strongest wage rises for the quarter were Manawatu-Whanganui (+3.4% y/y) and Waikato (+3.0% y/y), with the smallest increases in Wellington (+2.4% y/y) and Bay of Plenty (+2.5% y/y).

Strong jobs growth keeps Index above 100

Despite weak sales results, jobs growth remained strong with a 6.8% y/y rise in the December quarter. This is more than double the pre-COVID average (3.0% y/y), and likely underpinned by New Zealand’s strong population growth in 2023.

There was a slight decline in the Xero Small Business Index, driven by weak sales and wages metrics. Despite this, the Index still remained above 100 at a solid 131 points across the quarter, influenced by the strong jobs growth during that period.

“There has been an impressive and sustained rebound in employment after the pandemic and it’s encouraging to see that despite the drop in sales and slower wage growth, small businesses remain eager to hire talent and hold on to their employees,” says Snelling.

“This job growth will ensure the small business sector is primed to take advantage of upcoming opportunities once conditions improve. However, if sales continue to slump, many small businesses will be left in a vulnerable position.”

Other services[1] (+7.8% y/y), professional services (+6.2% y/y) and construction (+6.0% y/y) had the strongest jobs growth over the quarter, with agriculture (+3.8% y/y) tracking as the weakest industry over this period.

By region, Auckland (+7.5% y/y) and Wellington (+7.3% y/y) led jobs growth for the December 2023 quarter, with Manawatu-Whanganui experiencing the smallest rise (+3.8% y/y).

Compared to international counterparts, New Zealand’s jobs growth (+7.3% y/y) for the month of December 2023 was more than double Australia’s (+3.5% y/y) and well ahead of the UK’s (+1.4% y/y).

More support needed for Kiwi small businesses

“The road ahead remains challenging for small businesses in New Zealand. Now more than ever, small businesses should be talking to their advisors, forecasting their cash flow and ensuring they have all the tools in place to get paid as quickly as possible so they can be agile with cash on hand,” says Snelling.

“This most recent XSBI data also shines a light on how important it is for Kiwis to continue supporting small businesses by paying invoices on time and shopping locally whenever possible.”

For further information on the Xero Small Business Insights December quarter metrics, please refer to the XSBI New Zealand update. To find out more about how the Xero Small Business Index is constructed, see the methodology.

[1]'Other services' includes a range of personal services such as hair, beauty, weight management, funerals and religious services


Media Contact

Natalie Weber-Benning | Xero Communications | +64 21 02619604 |

About Xero

Xero is a global small business platform with 3.95 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. Xero is a FIFA Women’s Football partner.

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.

For all media enquiries, please contact the Xero media team.

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