July small business sales slip, lowest since September 2021

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Xero, the global small business platform, today released its Xero Small Business Index for July 2022, revealing that sales have fallen as the cost of living begins to impact small businesses in Aotearoa.

Sales fell -1.5% y/y in July, compared to 4.4% y/y growth in June and the weakest since September 2021.

Bridget Snelling, Country Manager at Xero, says inflation is making the situation worse for small businesses.

“Inflation in Aotearoa reached 7.3%. This suggests that the volume of goods and services sold has in fact been much lower and that the price increases are hiding this real drop in sales. We estimate that the drop in sales for small businesses is closer to -8.8% year-on-year.

“This is a clear sign that small businesses across the country need our support. If you can afford it, buy local and move the money around the New Zealand economy.

Global data shows that small business sales in Aotearoa are one step behind Australia and the UK. While their sales growth slows month over month, it continues to grow at 7.5% and 4.5% respectively, or +1.4% and -4.3% YoY adjusted for based on their inflation rates.

Jobs in small businesses continue to grow, wages remain high

July data shows that there are 4.7% more jobs in small businesses than a year ago. This is the third month in a row that job growth has exceeded the long-term average of 3.0% year-over-year.

Snelling says that’s a good sign: “Job growth means more Kiwis are choosing to work in small businesses. We are in the midst of a major labor shortage and it is encouraging to see that small businesses continue to compete with big business. It is also a sign that small business owners are confident in future growth.

Most industries in Aotearoa saw strong employment growth, led by manufacturing at 8.4% year-on-year. Sectors that struggled to attract talent in July were agriculture (-2.8%y/y) and hospitality (-3.7%y/y).

Wages rose 6.2% year-on-year in July, down slightly from an all-time high of 6.7% year-on-year in June.

“After five straight months of successively faster wage growth, some small business owners will be relieved to see that slow in July. However, at 6.2% year-over-year, it is still the second-highest growth rate recorded since the launch of XSBI in 2017,” adds Snelling.

“We want to have a high-wage economy, but that’s only sustainable if our small businesses have the sales to support it. Right now, that’s not what the data shows. I know the cost of living impacts everyone, but please prioritize local small businesses whenever possible.

All regions recorded wage growth of 6% or more, led by Otago and Waikato (each +6.7% y/y). Construction (+7.5%y/y) recorded the strongest wage growth, followed by hospitality (+6.6%y/y) and manufacturing (+6.5%y/y) .

Small business wait times remained unchanged in July at 23.5 days, in line with the 2021 average (23.9 days). This suggests that small business customers are not currently delaying paying bills.

“Paying your bills on time or in advance is another way to help our small business community. It helps with cash flow issues, which is especially important in tough times,” says Snelling.

For more information on Xero Small Business Insights July 2022 metrics, please see the New Zealand XSBI Update. To learn more about the construction of the Xero Small Business Index, see the methodology.

About Xero

Xero is a global small business platform with 3.3 million subscribers that includes a basic accounting solution, payroll, labor management, expenses and projects. Xero also provides access to financial services and an ecosystem of over 1,000 connected apps and over 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 has been 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 FIFA Women’s Football Partner as part of FIFA’s new business structure.

Note to Editor

Previous iterations of XSBI data listed snapshots of data from the time it was captured. Some of these historical data points change as bookkeepers and accountants finalize accounts for their clients, which may affect percentage details.

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