Australian SMEs record highest job growth in 11 months: Xero

Despite a slowdown in sales, Xero’s Small Business Index for July indicates that Australian small businesses have recorded the strongest job growth in nearly a year.

The number of jobs rose 4.1 percent year-on-year, the largest increase since August 2021, including growth in sectors that have recently struggled to find talent, such as hospitality and agriculture.

“Small businesses remained resilient in the face of inflation and other supply chain challenges according to the July Index,” said Joseph Lyons, Xero Managing Director Australia and Asia.

“While inflation is affecting small businesses worldwide, our data shows that Australian small businesses are slightly outperforming those in New Zealand and the UK in terms of revenue. While this doesn’t mean things are going smoothly for local small businesses – as most can attest – it’s promising to see an overall above-average performance, especially for sectors that have suffered.”

New South Wales led all states in job growth at 7.7 percent year-on-year, while Tasmania posted positive growth of 1.8 percent year-on-year for the first time in seven months.

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Revenue growth, meanwhile, fell from 11.4 percent year-on-year in June to 7.5 percent in July. This has largely been attributed to pressures on the cost of living, with prices rising faster than wages in the country and thus affecting spending in small businesses.

Louise Southall, economist at Xero, explains: “When prices are taken into account, using the June consumer price index, it suggests that sales volume is up 1.4 percent year-on-year (from +5.3 percent year-on-year). ). in June). But this means that small businesses still sold more goods and services in July 2022 than in July 2021.

“This is different from the experience of small businesses in other countries, such as the UK and New Zealand, where sales, excluding price effects, actually fell in June and July.”

Xero’s Small Business Index, developed in partnership with Accenture, now sits at 111 points around the 2021 average.

Interestingly, the data showed that despite the increase in the minimum wage, wage growth did not increase significantly. Wages rose 3.6 percent year-on-year in July, compared to 3.4 percent year-on-year in June.

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Telecommunications and information media led wage growth at 4.3 percent year-over-year, while health care recorded the lowest growth at 2.7 percent year-over-year.

Xero’s Small Business Index also found that the average time for small businesses to pay saw an increase, rising to 23.2 days. This follows a 3.0-day drop in June, which was largely due to the end of the fiscal year, when this statistic usually shows a big improvement.

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