While year-on-year (y/y) sales were up 27.3 percent, Xero Country Manager, Bridget Snelling, says this number is inflated by August 2021 results being heavily impacted by the COVID-19 Alert Level 4 lockdown.
“When analyzing data significantly impacted by economic factors like lockdowns, it’s best to use two-year annualized growth,” says Snelling.
With this factored in, sales for August 2022 rose a still strong 10.4 percent y/y. Snelling says this is a great sign for the small business community and a much stronger result than the 2.5 percent y/y result recorded in July 2022.
“While some of this growth is likely to be attributed to small businesses increasing prices in response to inflation, a nominal growth percentage of double digits would also suggest more goods and services being sold overall as well.
“This is encouraging and seems to point towards Kiwis making a concerted effort to spend locally in order to support their local small business community.
“It’s important we acknowledge there will be small businesses that are not doing as well as others at the moment, however the data signals a slight shift in the right direction, and comes on the back of Aotearoa’s 1.7 percent GDP growth in the June quarter.”
Encouraging trends: Job and wage growth
Jobs growth was 4.9 percent y/y in August, making it the strongest month for this metric since January 2022 and the fourth successive month jobs growth has been above the long term average of 3.0 percent y/y.
“It’s encouraging to see small businesses across the country remaining attractive options for Kiwis looking for employment, especially after the Omicron slowdown we saw earlier this year and when the national unemployment rate is so low at 3.3 percent,” says Snelling.
“Overall XSBI data suggests small businesses in Aotearoa have been able to, so far at least, navigate the challenging economic environment.
“This aligns with the Reserve Bank’s latest Monetary Policy Statement from August, pointing towards our economy’s resilience during the first half of 2022.”
Furthermore, wages were up 5.8 percent y/y in August - a decline from the 6.7 percent y/y peak in June 2022.
“This slight relief is no doubt welcomed by small business owners who have been paying wage rises well above the long-term average (3.9 percent y/y) for the past six months,” says Snelling.
“As we head into the final stretch of 2022, our hope would be to see these trends stabilize to give Aotearoa’s small business economy a degree of certainty to begin planning for the future.”
Small Business Index declines slightly
The upswing in sales was offset by the impact of slower wage growth, resulting in the New Zealand Small Business Index falling eight points in August to 133.
Despite this, the New Zealand Index remains above both Australia and the United Kingdom (119 and 88, respectively).
Related media and inquiries
For all media inquiries, please contact the Xero media team.
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