New Zealand small business jobs and wages remain stable in October

Wellington — 24 November, 2022 —Xero, the global small business platform, today released its Xero Small Business Index for October 2022, revealing New Zealand small businesses are continuing to adjust to the economic climate.

Overall the Index rose one point to 132 in October. Jobs rose 7.4 percent year-on-year (y/y), similar to the 8.0 percent y/y result recorded in September. This remains well above the 3 percent y/y average.

Furthermore, wages were up 5.5 percent y/y in October, after a similar level of growth in September (5.6% y/y).

Sales growth, however, trended lower. Sales rose 5.8 percent y/y in October after a 24.6 percent y/y rise in September.

Xero Country Manager, Bridget Snelling, says this all points towards a small business sector continuing to navigate the current macroeconomic environment.

“The continued growth of small business jobs in the face of record low unemployment is encouraging. It shows that our smaller firms across the country are still competing well against big businesses when working to acquire talent,” says Snelling.

“While sales growth is down following two months of inflated results, due to COVID-19 lockdown in Auckland this time last year, it’s still a solid result as Kiwi business owners hold steady in the face of economic uncertainty.

“Small business owners will also be happy to see wage growth continue to slow as they walk the tightrope of slowing sales and the rising cost of living for their employees.

“It’s important to note wage growth still remains historically high, so we do have to keep a close eye on small business sales to ensure the growth is sustainable.”

Widespread small business job growth

All industries had strong job gains except agriculture (-0.3% y/y) which recorded its 12th consecutive month without job gains.

The largest rises were in professional services (+10.0% y/y), hospitality (+9.0% y/y) and rental, hiring and real estate (+9.0% y/y).

“It’s encouraging to see small business employment remain strong. However, agriculture continues to fall behind most likely due to border and visa restrictions creating a backlog of international seasonal workers,” says Snelling.

Looking at the regions, Auckland (+9.4% y/y) had the largest job gains but this is partly due to the soft 2021 result, impacted by COVID-19 lockdowns, inflating this month’s numbers slightly. Otago (+3.6% y/y) had the smallest growth, but this is still above the 3.0 percent y/y long term average.

Slowed sales growth following inflation

After two months of inflated sales results, due to Delta lockdowns influencing 2021 outcomes, sales growth rose 5.8 percent y/y in October.

However, Snelling says with the latest inflation figure at 7.2 percent in September, this means the growth in sales is due to prices rather than selling more goods and Kiwi small businesses will likely still be feeling the crunch.

“The impacts of the 2021 COVID-19 restrictions are present in these year-on-year results. For example, hospitality sales were up 33.5 percent y/y, boosted by soft results last year when many venues were still operating under restrictions in Auckland,” says Snelling.

“Furthermore, Auckland recorded the strongest sales result, up 10.6 percent y/y. This was almost double the second strongest region, Otago (+5.5% y/y), but was bolstered by the ongoing Delta restrictions seen in the City of Sails last year.”

Wage growth continues cooling

After reaching a peak of 6.7 percent y/y in June, wage growth has continued to slow, falling to 5.5 percent y/y in October 2022.

However, wages are still growing faster than the long-term average of 3.9 percent y/y, with the highest result recorded in professional services (+6.2% y/y) and the smallest rise was agriculture (+5.2% y/y).

Small Business Index remains high

The New Zealand Small Business Index, part of Xero Small Business Insights, rose one point to 132 in October as a slowdown in sales growth was offset by another month of solid jobs, wages and payment times results.

“The recent softness in sales is bolstered by ongoing strong job gains and some easing in wages growth, which are all positive signs for small businesses as the holiday period approaches,” says Snelling.

“It remains important for Kiwis to spend locally where possible to help continue supporting Aotearoa’s small business economy, especially during the summer slowdown.”

For further information on the Xero Small Business Insights October 2022 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.

ENDS

Media Contact

Natalie Weber-Benning | Xero Communications | natalie.weberbenning@xero.com

About Xero

Xero is a global small business platform with 3.5 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. For three consecutive years (2020-2022) Xero was included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero is a FIFA Women’s Football partner under FIFA’s new commercial structure.

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.