Labor market bolsters NZ small business economy
Rising sales and eased wage growth encouraging for small business
Wellington — 27 October, 2022 — Xero, the global small business platform, today released its Xero Small Business Index for September 2022, revealing Kiwi small businesses are so far managing to navigate and adjust to the changing economic climate.
Jobs rose 8.5 percent year-on-year (y/y), the largest rise seen since July 2021.
Sales growth was also strong in September 2022, up 14.8 percent y/y, well ahead of the latest inflation figure (7.2%).
Simultaneously, wage growth slowed again to 5.1 percent y/y in September, down from 5.9 percent y/y in August and the record high of 6.7 percent y/y in June.
Xero Country Manager, Bridget Snelling, says strong jobs growth is an encouraging result as Kiwi small businesses have the confidence to grow their teams and are able to continue to hire against the backdrop of record low unemployment.
“The small business economy is still highly attractive to Kiwi employees and competing well with large businesses,” says Snelling.
Manufacturing (+10.4% y/y) and professional services (+10.5% y/y) led the job gains, while hospitality jobs rose 9.2% y/y - the first positive result since August 2021.
Only agriculture (-0.3% y/y) has fewer jobs than a year ago, for the 11th consecutive month.
Wage growth slows slightly
While wage growth has decreased slightly, it remains above the long term average of 3.9 percent y/y.
The largest wage gains were in professional services (+5.8% y/y), while only agriculture (+4.6% y/y) and retail trade (+4.8% y/y) were below 5 percent.
“A slowing in wage growth will likely be a welcome sign of relief for small business owners grappling with rising wage demands from employees,” says Snelling.
Across the regions, Auckland had the slowest wage growth at 5.0 percent y/y, with the highest being 5.5 percent y/y in Otago, Waikato and Hawke's Bay.
Strong sales continue to bolster businesses
The positive sales result (14.8%) for New Zealand measures nominal sales, including movements in both price and volume.
“When we factor in the latest inflation figure of 7.2 percent for the September quarter, this shows sales volumes are still rising,” says Snelling.
“This, coupled with increased activity, is a good indication Kiwis are making an effort to spend locally and support the small business community in a fairly uncertain economic time.
“Ultimately, it’s encouraging to see that, for now, small businesses are still confident enough in their sales to be hiring new staff while balancing wage demands and rising inflation.”
Small Business Index falls in September
The easing of wage growth saw the New Zealand Small Business Index fall 12 points in September to 125. Despite this, overall performance remains well above the average of 100.
“It’s a testament to the tenacity of our small business economy doing its best to adapt to the changing economic landscape.
“As a nation, we’re doing well to support our local business community. With further increases to the official cash rate possible, we need to keep pushing and continue shopping locally where possible.”
For further information on the Xero Small Business Insights September 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.
Natalie Weber-Benning | Xero Communications | email@example.com
Xero is a global small business platform with 3.3 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also provides access to financial services, and an ecosystem of more than 1,000 connected apps and more than 300 connections to banks and other financial institutions. Through Xero’s open platform, small businesses can connect to a range of solutions that 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 has been named as a FIFA Women’s Football partner under FIFA’s new commercial structure.
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