New Zealand Small Business Jobs And Wages Remain Stable In October

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.

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