September XSBI data portrays a turbulent month for small business
For many small businesses, navigating the pandemic has probably felt like turbulence during a flight – you never know when it’s going to hit, or how long it’s going to last for.
The Xero Small Business Insights (XSBI) data for September shows the myriad of factors influencing small businesses at the moment, and the ongoing obstacles they are faced with.
The Small Business Index – a key indicator of the sector’s health – fell in New Zealand, Australia and the UK in September. These results paint a picture of deteriorating small business conditions, but in particular, weak jobs growth. Both the UK and Australia experienced a decline in jobs in the year to September, and jobs growth also slowed in New Zealand.
Data tells a tale of two economies in Australia
Australian small businesses are beginning the journey out of lockdowns after more than three months of various restrictions. The national data masks a tale of two economies. September data shows the areas that have been in lockdown (NSW, Victoria and ACT) saw falling jobs growth and declining sales, while states like Queensland and Western Australia thrived without restrictions.
Australian small business jobs declined in September for the first time in 2021, falling 0.9% year-on-year (y/y). Jobs in NSW fell 4% y/y and Victoria recorded a fall in jobs of 2.5% y/y. In contrast, all of the open states recorded positive jobs growth with Western Australia (+5.6% y/y) and Queensland (+2.9% y/y) leading the way.
Solid sales in the UK, jobs still slow to recover
In the UK, the Index fell 5 points in September to 88 points – the lowest it’s been since February 2021. Despite the UK ending all trading restrictions in July, this result goes against expectations of a sustained bounce in economic activity once restrictions were removed.
Small businesses in the UK continue to face an uphill battle with jobs recovery, with small business jobs falling 2.2% y/y in September. With the end of the furlough scheme on 30 September, the October data will reveal if labour force patterns return to normal or if jobs continue to be impacted in different ways.
Strict restrictions in Auckland impact national performance
New Zealand went into a nationwide lockdown in mid-August after several months of living with no restrictions. While most of the country was able to lift some restrictions in September and more businesses could operate, Auckland remained in lockdown.
September data shows the full extent of a whole month in lockdown for small businesses in Auckland. The country’s largest city experienced the biggest drop in sales (18.4% y/y) since April 2020 when the pandemic hit New Zealand’s shores.
Small business jobs in New Zealand have not been hit as hard as Australia and the UK, but jobs growth slowed to 3.3% y/y in September after being over 5% y/y for the previous four months.
Small businesses facing complex hiring challenges
Interestingly, new reports show an increase in job vacancies and advertisements in all three regions. This is reflective of the turbulent conditions facing small businesses – such as businesses returning to full trading, furlough and Brexit in the UK, border closures in Australia and New Zealand, and disrupted sectors struggling to attract hesitant staff.
For example, hospitality businesses who rely on international workers, or those in the agricultural industry who are unable to find staff for seasonal work. There’s the events, arts and recreation businesses whose industries have been turned upside down by this pandemic. They are all struggling with the perfect storm of business conditions.
The resilience and resourcefulness of small businesses throughout this pandemic cannot be underestimated. Speaking to our customers all around the world, one thing is clear to me. The strong sense of community that small businesses create, and use to support each other. While it will be a bumpy road out, I encourage small businesses to continue to lean on the help available and stay connected to those in your community.
In these tough times, mindset plays an important role in maintaining good wellbeing. I recently sat down with professional mindset coach, Ben Crowe, to get his advice on how small businesses can understand and take control of their mindset during difficult times. You can watch the video to learn more.
Read more about our monthly metrics for September in our XSBI updates:
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Source: Xero Blog
