Xero’s Small Business Index has moved into above-average territory for the first time since July 2021, showing small businesses are beating the lockdown blues.
November’s Index rose by an impressive six points. This increase indicates small businesses have responded well to the increased easing of restrictions in NSW, Victoria and the ACT. Last months outcome places total small business performance above the national long-term average.
Since its low in September of 2021, the Index has risen 15 points.
Silly season sales
A surge in small business sales drove November’s index rise. Last month’s sales were up 11.1 per cent compared to the year before. This increase is more than double the growth of 5.1 per cent recorded in October’s Index.
Sales growth was nationwide in November, ranging from 8.4 per cent in Tasmania to 15.9 per cent in Western Australia. The results are attributed to the eased COVID-19 restrictions and retailers urging customers to shop early this Christmas to avoid shipping disruptions and delivery delays.
Louise Southall, Xero Economist, said, “It is great to see the November Xero Small Business Index showing an improvement in the overall performance of small businesses. Yet, even though this data is less than a month old, small businesses are once again facing heightened uncertainty as this pandemic takes another turn.
“Experts are still working out what Omicron means from a health perspective which makes it impossible to predict what the economic impacts will be at this stage. But one thing is clear – small businesses need our ongoing support this holiday period to help them through yet another challenging few months.”
Jobs pick up
A rebound in small business jobs is a good indicator of what’s to come in 2022 should restrictions remain eased. Across the country, small business jobs rose 1.1 per cent in November. This represents a significant jump from October when jobs grew by just 0.6 per cent.
Jobs growth remained relatively flat in states that emerged from lockdown in November, with NSW experiencing 0.3 per cent, 0.2 per cent in the ACT. Meanwhile, Victoria recorded negative growth of -0.1 per cent. Tasmania recorded a second month of negative jobs growth, down -0.1 per cent. Now that borders are open along the east coast, conditions are likely to improve for those small businesses dependent on interstate visitors.
Wage recovery continues
Jobs recovery, however, appears to be slower than soaring sales. Wages growth was marginally higher in November at 2.8 per cent, up from 2.7 per cent in October. November is the fourth consecutive month of modest wage growth, with wages defying jobs and sales growth.
In November, the difference between states levelled out; growth ranged from 2.6 per cent in ACT and NSW to 3.1 per cent in Tasmania. The construction industry remains the sector with the most robust wage growth, up 3.5 per cent, while administrative and support services experienced the slowest growth at 2.0 per cent.