Xero’s latest Small Business Insights (XSBI) program reveals that small business jobs rose in October, despite the winding down of government support programs such as JobKeeper, although revenue experienced slower year-on-year growth.
Casual jobs continued to recover in October and have now risen 27 per cent since the lowest point during the pandemic in mid-April 2020. XSBI data shows that casual employment is now 3.7% below pre-crisis levels with growth of 1.7 per cent over October as sectors supported by casual workers, like hospitality and retail, ramp up hiring ahead of the summer period.
“It is encouraging to see the rise of casual employment as we approach the summer holidays. While small business has experienced slower year-on-year revenue growth this month compared to prior months, the jobs increase signals a pick-up in business momentum as small businesses gear up for the peak holiday season and scale their operations with more casual workers. We’re hopeful this will be a continued trend in November,” said Trent Innes, Managing Director Australia and Asia, Xero.
Employment steadily recovering
Small business jobs rose 0.9 per cent in October, continuing the steady rebuilding of recent months. This result comes despite the significant changes to the JobKeeper wage subsidy scheme at the end of September.
Overall, small business jobs are still 2.2 per cent lower than they were pre-crisis. The main industries constraining a return to pre-pandemic levels continue to be hospitality and arts and recreation. Both sectors are steadily recovering, and recorded another month of job gains with hospitality and arts and recreation growing 0.8 per cent and 1.8 per cent respectively month-on-month.
All states and territories contributed to the job gains, including Victoria which spent much of the month still under tight lockdown restrictions.
Revenue growth slips
Small business revenue fell 0.5 per cent year-on-year in October. The decline comes after three months of positive growth, including an 8.1 per cent rise in the 12 months to September. Stepping back from the monthly results to take a longer view, revenue is at similar levels to that seen a year ago which is encouraging given the significant economic shock delivered by the pandemic.
The softer revenue results may also, at least in part, reflect the gradual withdrawal of the government stimulus that has been flowing through to small businesses since March.
In October all states and territories saw slower year-on-year revenue growth than they had in September, although Western Australia, South Australia, Queensland and New South Wales still recorded positive growth. A year-on-year comparison for the month of October showed revenue fell 4.1 per cent in Victoria and also declined in the smaller states and territories.
All industries reported slower revenue growth in the year to October. Hospitality and arts and recreation remain the sectors with declines in annual revenue, down 13 per cent and 15 per centrespectively. All other sectors monitored by XSBI saw slower but still positive revenue gains in the 12 months to October.
Payment times continue to fall
The length of time small businesses are waiting to be paid continues to track lower. Invoices that are paid are now settled on average in just 23.7 days – this is 1.8 days faster than the level seen prior to the pandemic.
Victorian lockdown continues to impact
Victorian small business revenue fell 4.1% year-on-year after recording a small positive result in the year to September. The weakest sectors remain those that have spent much of 2020 closed – hospitality revenue is down 29 per cent compared to a year ago and arts and recreation is down 36 per cent over the same period. Manufacturing, an important sector for Victoria, had a 4 per cent rise in revenue.
Victoria recorded the largest decline in year-on-year revenue of any state, but the rest of the country also saw a slowing such that overall, the gap between Victorian and Australian revenue narrowed to be 3.6 percentage points. This is still a sizable gap but it has halved since September, in part due to regional Victoria largely returning to normal operations in October.
“The narrowing of the small business revenue gap between Victoria and the rest of Australia is a positive sign for future months, especially as Melbourne restrictions have been eased significantly throughout November, allowing many small businesses in those hardest hit industries to resume operations. The XSBI November data will reveal not only how quickly Melbourne small businesses have adjusted to reopening, but also whether job gains seen immediately after the end of JobKeeper will be sustained,” added Innes.
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