Jobs growth within small businesses despite ‘tightening of the belts’

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Over the September quarter, sales growth ticked over at 0.7 percent.
Photo: 123rf

Small businesses are facing declining sales in a challenging trading environment.

Accounting software company Xero’s Small Business Insights report shows sales fell 1.5 percent year-on-year in September.

Over the September quarter, sales growth ticked over at 0.7 percent.

Despite weak sales, jobs growth remained strong – rising 7 percent year-on-year – while wages increased 3.5 percent.

Xero country manager Bridget Snelling said the pace of jobs growth may not be sustainable given the downward trend in sales.

“The road ahead is still challenging for Kiwi small businesses,” she said.

“We’ve seen a drop in sales, even though we’ve seen jobs growth. What we know is that looking at these results, customers don’t have much disposable income left over to be shopping.

“We’re seeing a tightening of the belts, a tightening of the purse strings and that is a concerning factor with supporting small businesses.”

Sales in agriculture fell 5.4 percent year-on-year, with the international economy impacting New Zealand’s exports.

“There are differences in industries and regions. Sales are inconsistent across the country with some regions facing more challenging times than other.”

There were regional bright spots, with sales growth in Hawke’s Bay (+5.4 percent), Auckland (+1.7 percent) and Otago (+1.5 percent).

Hospitality and tourism fuelled an 8.3 percent annual increase in jobs growth in tourism-focused Otago, followed by Canterbury with 7.8 percent.

New Zealand was significantly behind Australia, which delivered steady 5.5 percent year-on-year growth in September.

“It’s clear we’re sitting in the middle of the pack when you look at the latest data coming out of North America, with the US experiencing a 7.7 percent drop and Canada a 5.6 percent drop in June,” Snelling said.

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