Xero, the global small business platform, today released its Xero Small Business Index for August 2022, revealing green shoots in the Aotearoa small business community after subdued sales over the winter.
While year-over-year (y/y) sales were up 27.3%, Xero Country Manager Bridget Snelling says that number is inflated by August 2021 results, which were heavily impacted by the COVID-19 alert level 4 lockdown.
“When analyzing data heavily impacted by economic factors such as lockdowns, it’s best to use two-year annualized growth,” says Snelling.
Taking this into account, August 2022 sales were up 10.4% year-on-year. Snelling says this is a good sign for the small business community and a much stronger result than the 2.5% year-over-year result recorded in July 2022.
“While some of this growth is likely attributed to small business prices rising in response to inflation, a double-digit nominal percentage growth would also suggest that more goods and services are being sold in the together.
“It’s encouraging and seems to indicate that Kiwis are making a concerted effort to spend locally to support their local small business community.
“It is important that we recognize that there will be small businesses that will not do as well as others at this time, but the data signals a slight shift in the right direction and builds on growth of 1, 7% of Aotearoa’s GDP in the June quarter. ”
Encouraging trends: employment and wage growth
Job growth was 4.9% year-on-year in August, making it the highest month for this measure since January 2022 and the fourth consecutive month job growth has exceeded the long-term average of 3.0% year-over-year.
“It’s encouraging to see that small businesses across the country continue to be attractive options for Kiwis looking for work, especially after the Omicron downturn we saw earlier this year and when the rate of National unemployment is so low at 3.3%,” Snelling says.
“The overall data from XSBI suggests that small businesses in Aotearoa have been able, so far at least, to navigate a difficult economic environment.
“This aligns with the Reserve Bank’s latest monetary policy statement from August, indicating the resilience of our economy through the first half of 2022.”
Additionally, wages rose 5.8% year-on-year in August, down from a peak of 6.7% year-on-year in June 2022.
“This slight relief is no doubt welcomed by small business owners who have paid salary increases well above the long-term average (3.9% year-on-year) over the past six months,” says Snelling. .
“As we head into the home 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 drops slightly
The rise in sales was offset by the impact of slowing wage growth, which caused the New Zealand Small Business Index to fall eight points in August to 133.
Despite this, the New Zealand index remains higher than Australia and the United Kingdom (119 and 88, respectively).
For more information on the August 2022 Xero Small Business Insights metrics, please see the New Zealand XSBI Update. To learn more about the construction of the Xero Small Business Index, see the methodology.
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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