New Zealand small businesses bolstered by sales and jobs growth - Xero index

Rising sales and eased wage growth encouraging for small business. Photo / 123RF

Rising sales and job growth has bolstered New Zealand's small business economy.

Xero's Small Business Index for September has revealed small businesses are so far navigating the changing economic climate.

Sales growth was strong in September 2022, up 14.8 per cent year-on-year, while jobs rose 8.5 per cent year-on-year - the largest rise since July 2021.

Helping ease pressure on small businesses was the slowing in wage growth, which was up to 5.1 per cent in the year to September, but down from 5.9 per cent in August and a record high of 6.7 per cent in June.

Bridget Snelling, Xero country manager, said the figures were an encouraging result as Kiwi small businesses have the confidence to grow their teams and are able to continue to hire against the backdrop of record-low unemployment.

"The small business economy is still highly attractive to Kiwi employees and competing well with large businesses," she said.

"When we factor in the latest inflation figure of 7.2 per cent for the September quarter, this shows sales volumes are still rising.

"This, coupled with increased activity, is a good indication Kiwis are making an effort to spend locally and support the small business community in a fairly uncertain economic time."

Hospitality jobs rose 9.2 per cent year-on-year - the first positive result since August 2021 - in a sign that the industry may be recovering from the Omicron setback and more than two years of Covid turmoil.

Professional services and manufacturing led the job gains, up 10.5 per cent and 10.4 per cent respectively in the year to September.

Only agriculture (down -0.3 per cent) has fewer jobs than a year ago, for the 11th consecutive month.

"It's encouraging to see that, for now, small businesses are still confident enough in
their sales to be hiring new staff while balancing wage demands and rising inflation," Snelling said.

While wage growth decreased slightly, it remains above the long-term average of 3.9 per cent year-on-year.

There were wage gains in professional services (up 5.8 per cent), agriculture (up 4.6 per cent) and retail trade (up 4.8 per cent)

"A slowing in wage growth will likely be a welcome sign of relief for small business owners grappling with rising wage demands from employees," Snelling said.

Across the regions, Auckland had the slowest wage growth at 5 per cent year-on-year, while the highest was in Otago, Waikato and Hawke's Bay (up 5.5 per cent).

Overall, the New Zealand Small Business Index fell 12 points in September to 125, but remains well above the average of 100.

"It's a testament to the tenacity of our small business economy doing its best to adapt to the changing economic landscape," Snelling said.

"As a nation, we're doing well to support our local business community. With further increases to the official cash rate possible, we need to keep pushing and continue shopping locally where possible."