Xero, the small business platform, released its Xero Small Business Insights (XSBI) update, highlighting that Australian small businesses are persevering amid challenging macroeconomic conditions and still outperforming small businesses in other countries.
As noted in the research report shared by Xero, here are takeaways from the September quarter:
- Sales growth averaged 3.7% year-on-year (y/y) for the September quarter (5.0% y/y for the June quarter)
- Wages growth averaged 2.9% y/y for the September quarter (2.8% y/y for the June quarter)
- Jobs growth averaged 4.8% y/y for the September quarter (4.3% y/y for the June quarter)
- Small businesses waited 22.1 days to be paid in the September quarter (21.7 days to be paid in the June quarter)
As stated in the research study from Xero, small business hiring continued in the three months to September, with jobs growth “strong in August (+5.0% y/y) and September (+5.8% y/y) — the September result is the largest increase in two years.”
There was a noticeable variation in jobs “growth across the industries and regions.”
Job gains were led by “public administration (+9.0% y/y) and healthcare (+8.6% y/y), two sectors that are underpinned by public sector spending.”
The “3.7% y/y rise” in sales in the September quarter is only about half the long term average growth rate for this series, highlighting the “challenging environment faced by small businesses.”
Nevertheless, Australian small businesses continue to “outperform all countries tracked in this XSBI series on sales, with the US (-0.9% y/y, June), New Zealand (-2.7% y/y, September) and Canada (-3.7% y/y, June) recording negative sales growth within the latest quarter.”
Australia also recorded the highest proportion of small businesses creating jobs and the “shortest payment times, and is one of the most effective at managing wage cost pressures.”
At an industry and regional level, “public administration (+12.0% y/y), healthcare (+10.2 y/y) and Queensland (+5.8% y/y) led on sales growth, while hospitality (+0.3% y/y), agriculture (+1.1% y/y) and Tasmania (-0.6% y/y) recorded the weakest results.”
Wages growth remained steady at “2.9% y/y, a slight uptick on the 2.8% y/y rise in the three months to June.”
This suggests small businesses continue to pay “smaller wage increases than the national average (as measured by the Australian Bureau of Statistics‘ Wage Price Index), which for the year to June was 4.1%.”
Payment times showed a small increase in the September quarter.
Payments were made an average of “6.1 days late, compared to 6.0 days in the June quarter, and small businesses waited an average of 22.1 days to be paid, up from a 21.7 day wait in the June quarter.”
This result was largely due to an abnormally “low June quarter result with businesses settling their accounts ahead of the end of the financial year.”
As covered, Xero is a global small business platform with “4.2 million subscribers.”
Xero’s smart tools help small businesses to manage core accounting functions like tax and bank reconciliation, and complete tasks like payroll and payments.
Xero’s ecosystem of apps and connections to banking platforms and other financial institutions provide a range of solutions from within Xero’s open platform to help small businesses run their business.