New data from Xero shows that small businesses have recorded a positive revenue growth for nine consecutive months, despite the impact of snap lockdowns on jobs in Victoria and Western Australia.
The report reveals that the year-on-year growth for small businesses in February was more than four percentage points above January’s result, with many jobs rebounding after the seasonal drop.
Small business revenue rose 5.1 per cent in February, compared to a 1 per cent rise in January. In all but two out of the previous nine months, revenue growth has been faster than the pre-crisis average of 4.6 per cent year-on-year.
Arts, recreation and hospitality took the hardest hit and recorded an 8 per cent dip in revenue year-on-year in February. All other industries recorded a positive revenue growth for the same time, including rental, hiring and real estate (+15 per cent), and manufacturing (+13 per cent).
“Pausing to reflect on it being one year since COVID-19 restrictions were first enforced, it is remarkable to see the Australian small business sector enter its ninth consecutive month of revenue growth,” said Trent Innes, Managing Director at Xero Australia and Asia.
“The latest Xero Small Business Insights analysis reminds us of the resilience of the sector in the face of the pandemic – but that some industries have been more fortunate than others.
“As the JobKeeper program has drawn to a close, for industries including arts and recreation, hospitality and tourism, it will be critically important for Australians to get behind them in any way they can. With Easter approaching, it’s another good excuse to support small business when you shop or travel.”
Small business jobs recover following seasonal dip
Small business jobs jumped 0.5 per cent from January to February and are now 1.6 per cent higher than they were when COVID-19 began to devastate the economy in March last year.
The strongest industries for jobs growth include healthcare (+6 per cent), manufacturing (+6 per cent), construction (+4 per cent), retail trade (+3 per cent) and professional services (+2 per cent).
Job numbers in heavily impacted industries, such as hospitality, arts and recreation, are now only 2 per cent and 1 per cent lower, respectively, than they were when the pandemic first hit.
More generally, casual employment rebounded from its usual seasonal dip in January and is now 1.2 per cent higher than it was in early March 2020.
Parallel to the surge in small business jobs, payment times for businesses also stabilised over the past half year and are now 1.6 days quicker on average.
Impact of local lockdowns and subsequent rebounds: Victoria and Western Australia
The local lockdowns in Western Australia (31 January – 5 February) and Victoria (13-17 February) resulted in a slower revenue growth than the 5.1 per cent average of other states year-on-year – 3.7 per cent and 2 per cent, respectively.
As a result of the snap lockdowns, both states saw an immediate drop in jobs during this time. The February figures, however, indicate that the jobs market improved as restrictions were lifted and staff returned to work.
In Western Australia, small business jobs fell 0.3 per cent over the month which is still better than the state’s 6.3 per cent drop during the lockdown period. Victoria recorded a slightly higher jobs fall of 0.7% over the month, although jobs picked up again in early March when cafes and restaurants reopened.
Tim Harcourt, J.W. Nevile Fellow in Economics at UNSW Business School, told Dynamic Business that the success of small businesses in Australia is a result of their ability to adapt and respond to the demands of the pandemic, and in some cases to add new product lines.
Despite the lower than average numbers of Victoria and Western Australia, he said it is expected “that overall economic recovery will drag these numbers up” and is hopeful that the newly-announced 3-day lockdown in Brisbane will have minimal impact.