Xero : 29/07/2021 - Strongest month for Kiwi small business since Level Four lockdown

MEDIA RELEASE

Strongest month for Kiwi small business since Level Four lockdown

Sustained strong sales and jobs growth points to ongoing small business momentum in June

Wellington - 29 July, 2021 -Xero, the global small business platform, today released its Xero Small Business Index for June 2021, which shows a record month for the overall Index.

Typically, the Index compares year-on-year (y/y) data to reveal how the small business economy is faring. However, as the data from June 2020 was significantly impacted by the pandemic, all comparisons in this release have been made using annualised two-year growth to account for base efects.

In June, small business sales increased 11.7% y/y (adjusted), continuing the strong trend seen in recent months (up 6% in May, 8.1% in April).

The momentum in jobs growth also remained in June with an adjusted increase of 5% y/y. This is above the average growth rate of around 3% y/y and comes afer a 5.2% y/y rise in May (adjusted).

Xero's Managing Director for New Zealand & Pacific Islands, Craig Hudson, says June is the strongest month for the small business economy since the Alert Level Four lockdown in 2020.

"Looking at the second quarter of 2021, we've seen the small business economy continue to recover from the impacts of last year. In fact, we're beginning to see some consistently strong growth," said Hudson.

"Sales is a key indicator of this, followed by job growth and increased wages. We're starting to see this as wage growth continues, increasing 3.7% year-on-year in June - reaching the strongest growth rate since January 2020."

Strong sales across small business economy

The retail sector dominated the strong performance (up 16.0% y/y), followed by manufacturing (up 14.3% y/y), and construction (up 13.4% y/y). The hospitality industry also continued its recent run of sales growth, up 10.4% y/y.

"It's encouraging to see improved sales across all industries in Aotearoa, especially in the hospitality sector, which has been severely impacted by the pandemic and subsequent lack of tourism coming into New Zealand," says Hudson.

"Of course, not every hospitality business will be back at 100% capacity, and with the Trans-Tasman bubble suspended for eight weeks it's important we continue supporting local small business owners when and where we can."

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Job growth momentum continues

The small business labour market also grew in June, with job growth up 5% year-on-year (adjusted), despite hospitality being the only industry to record a decline in jobs (0.9% year-on-year).

The strong jobs numbers were led by the manufacturing (up 8.6% year-on-year), construction (up 7.3% year-on-year) and retail sectors (up 7.0% year-on-year).

"Regionally, the growth in jobs appears to have focused mainly in Northland (up 8.4% y/y) and Waikato (up 6.9% y/y) while Bay of Plenty and Otago experienced the slowest annual growth in June (up 3% y/y and 1.7% respectively)," says Hudson.

"Despite the strong sales result seen in the hospitality sector, a lack of job growth in the industry points to chronic labour shortages across the country."

Small Business Index reaches new high

The Small Business Index rose 17 points in June 2021 to 127 points, a record high for the metric and an indication the overall performance of small businesses remains well above average.

"Driven by the strong sales and job growth figures recorded in June, seeing the Small Business Index reach new heights is an encouraging sign that New Zealand's small business economy is heading in the right direction," says Hudson.

"If we stay on this trajectory and continue to support Kiwi small businesses by shopping locally, we're well on our way to reaching - and even outperforming - pre-pandemic growth."

ENDS

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Media Contact

Natalie Benning

Head of Communications - NZ [e-mail]021 026 19604

About Xero

Xerois a cloud-based accounting sofware platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero ofers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScapeas a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

About Xero Small Business Insights

The Xero Small Business Insights (XSBI) program provides analysis of the sector's health, with metrics based on anonymised, aggregated data drawn from hundreds of thousands of subscribers in partnership with AlphaBeta Australia (part of Accenture). The result is a picture of business conditions that's more accurate than most private surveys, which have a far smaller sample size, and more frequently updated than other New Zealand data on small business. Xero is currently producing a series of specialised monthly metrics which analyse the impact of COVID-19 on the small business sector.

About Accenture

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions - underpinned by the world's largest delivery network - Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.

Note to the editor

Previous iterations of the XSBI data have listed snapshots of data from the time it was captured. Some of these historical data points change as bookkeepers and accountants finalise their clients' accounts, which can impact the specifics of the percentages.

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