Xero reports small business growth continues despite COVID

Xero’s Small Business Insights (XSBI) program has released the data from its December report and it is good news for business owners. Australia’s small businesses are reporting jobs growth above pre-crisis levels despite declining revenues and a smaller holiday sales season.

Jobs growth continues beyond pre-COVID-19 levels

Small business jobs grew 1.9 per cent month-on-month in December to be 3 per cent above pre-crisis levels. According to Xero, these gains were helped along by a massive jump in casual employment, up 36.8 per cent since April lows. Casual jobs are now at 3.8 per cent above pre-crisis levels. Some sectors also saw a marked growth on previous months. The hospitality industry recorded a 5.3 per cent month-on-month rise in small business jobs, pushing new jobs to 1 per cent above pre-crisis levels. This marks the first time the beleaguered sector has recorded jobs above March 2020 levels. Jobs in manufacturing also increased (+8 per cent) above March 2020 levels, as did retail trade (+7 per cent), health care (+7 per cent), and construction (+4 per cent).

Jobs in South Australia have rebounded by 5.6 per cent in December following a fall in November when premier Stephen Marshall instigated a three-day lockdown in Adelaide. Victoria has also recorded a strong post-lockdown small business jobs growth, now up 13.9 per cent since numbers dipped following the second lockdown..

Trent Innes, Managing Director Australia and Asia, Xero said the latest figures highlight the resilience of the small business sector and its contribution to the economy as the country’s number one employer.

“It is encouraging to see the continued upward trajectory in small business recovery as the sector records another month of jobs growth. It’s especially pleasing to see jobs in hospitality in positive territory, having been one of the hardest-hit industries.

“The decline in revenue growth is a reminder that the road to recovery isn’t linear and that small businesses will be navigating through peaks and troughs. With revenues dipping while the sector is still hiring, small businesses will need ongoing support,” added Innes.

Pause in revenue recovery following six months of positive growth

Small business revenues in December 2020 were 2.7 per cent lower than a year ago. The industry breakdown of this result points to a more subdued Christmas period for small businesses than in 2019. The three sectors with the closest links to this period all recorded year-on-year revenue declines – retail trade (-5 per cent), hospitality (-17 per cent) and arts and recreation (-22 per cent).

Western Australia was the only state to record year-on-year revenue growth in December (+0.8 per cent). Victoria recorded a 4.3 per cent year-on-year revenue decline, but this is now only 1.5 per cent points below the national result as the state catches up with the rest of the country after its second lockdown.

“Business conditions have vastly improved for most industries but small businesses are still facing uncertainty over the year ahead as we await the national vaccine roll-out. As witnessed in Adelaide and then in Sydney, disruptions caused by short-notice lockdowns can impact both trading conditions and general confidence. It will be important for small businesses to keep a close track of their cash flow position throughout 2021 and to work closely with their advisor,” concluded Innes.

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