Small firms experience six months of revenue growth

Xero small business insights show small firms experienced revenue growth for six consecutive months to November.

Small firms experienced a 3.2 per cent uplift in year-on-year growth in November, and jobs within the sector climbed 2.4 per cent over the month.

The data shows small business employment is now 3.2 per cent above pre-crisis levels recorded in March.

November was a month of strong performances across most industries and regions.

Xero managing director Craig Hudson said the consistent year-on-year revenue growth over the past six months was “encouraging” and showed that the country’s small business sector had returned to relative normality.

“While the rate of growth is slower than pre-Covid, the fact we’re ending 2020 with six months of positive revenue growth shows our resilience, and is something we should celebrate and be proud of,” Hudson said.

“It’s a testament to Kiwis banding together and embracing their local small businesses to help the economy recover in the wake of an unprecedented global crisis.”

Hudson said the result was proof of how hard small business owners and their employees had worked over the past year to revive their firms in the face of tough economic conditions.

Xero’s data show small businesses across the Tasman are experiencing are similar recovery, with Australian small business revenue growth 1.7 per cent above last year’s levels.

Small firms in Britain, however, continue to feel the effects of the pandemic, with revenue down 7.9 per cent in November.

All industries in New Zealand, excluding hospitality, saw an increase in revenue in the month. Revenues for hospitality operates were down 8 per cent on last year’s levels.

Strong revenue increases in the month were led by rental, hiring and real estate – up 9.6 per cent, followed by manufacturing up 8.6 per cent, construction 7.7 per cent and retail 4.3 per cent.

Regionally, Northland experienced the strongest lift in revenue in November, up almost 10 per cent, followed by Hawke’s Bay, up 7.8 per cent and Canterbury up 6.5 per cent.

The average payment time for small firms was 1.1 days faster in November.

Manufacturing hired the most amount of staff in November, now 10 per cent above pre-crisis levels, followed by real estate and retail up 6.7 per cent, construction 5 per cent higher, and professional services 2.7 per cent.

Wellington led the recovery in November, with 8.8 per cent more jobs now compared to pre-crisis records, followed by Hawke’s Bay with 8.2 per cent more jobs and Canterbury 8.1 per cent more jobs.

Jobs in hospitality remained flat in the month, and it is the only industry that has not experienced a meaningful recovery of jobs from those lost at the height of lockdown in April.

“Hospitality remains the hardest hit small business industry and the impact of lockdown is still being felt eight months later. Uncertainty around community transmission and the potential threat of further lockdowns are making hospitality owners hesitant to hire additional staff,” Hudson said.

“Overall though, the employment numbers across the board tell a great story of resilience and recovery for small businesses in Aotearoa. If we continue to buy local and support community businesses, it looks like the small business economy will be in relatively good shape to kick off 2021.”

Internationally, Australia has seen jobs continue to climb back towards pre-crisis levels, while Britain continues to struggle, with jobs down 4.2 per cent on pre-crisis levels.

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