Xero, the global small business platform, recently published its Small Business Insights data for the March quarter. The report suggests robust job growth within New Zealand's small businesses, while sales have seen only a modest rise. In the March quarter, there was a 7.0% year-on-year job increase, mirroring the results of the previous quarter and notably surpassing the long-term average of 3.0%.
Xero Country Manager Bridget Snelling sees this steady job growth as a sign of optimism among small businesses. “Small businesses remain eager to attract and retain talent, despite experiencing weaker sales,” says Snelling. “This is likely a move to avoid history repeating itself when sales pick-up again, as many small businesses were impacted by the skill shortage during the post-pandemic period in 2021 and 2022.” The strongest job growth was in other services (+8.7% y/y) and professional services (+7.1% y/y), while manufacturing (+4.4% y/y) reported the smallest growth.
Despite facing challenging conditions, small businesses saw moderate sales growth at the start of the year. Adjusting for the impact of Easter trading restrictions, small business sales increased in January (+2.1% y/y) and February (+5.6% y/y). These figures denote an improvement from the December quarter when sales decreased in December (-0.8% y/y). However, sales are progressing below the long-term average (+7.0% y/y), and sales in March dropped significantly (-9.4% y/y).
“With the country in a technical recession and Kiwis cutting back on discretionary spending, our small businesses continue to operate under really difficult conditions,” says Snelling. “Although it’s encouraging to see improvement compared to the end of last year, the truth is that there’s still a long way to go until our small business sales reach the long-term average.”
On the topic of wages, the report reveals that wages rose by 3.0% y/y in the March quarter of 2024, a slight increase from the 2.8% y/y of the previous quarter. However, agriculture continues to show the smallest rise, with an increase of only 1.8% y/y. Another area of focus was the impact of the end of the financial year on payment times. Small businesses waited an average of 22.9 days to be paid after issuing an invoice in the March quarter, which is a day quicker than in the December quarter.
The report further implies that small businesses are expected to navigate these challenging times and improve their financial health through digital adoption. However, more attention should be paid to ensure timely payment of invoices. Snelling stresses, “Getting paid on time is crucial for small business operations and plays an important role in helping improve conditions for our small business economy. We need to continue to support small businesses and shop locally where and when we can. It’s also crucial that small businesses lean on advisors for support and look to the digital tools available.”