Small business sales, job growth and wages lift - Xero

Small business sales recorded a strong return to growth in August, as firms managed to raise prices and increase sale volumes.

Xero's monthly small business survey shows sales increased by 10.4 percent in August, when compared with the same month two years ago.

The August 2020 data provides a more accurate benchmark because the 2021 figures were disrupted by the resumption of lockdown restrictions.

Xero country manager Bridget Snelling said the growth rate of 10.4 percent was strong, considering that sales only rose by 2.5 percent in July.

"While some of this growth is likely to be attributed to small businesses increasing prices in response to inflation, a nominal growth percentage of double digits would also suggest more goods and services being sold overall as well," Snelling said.

Many businesses were still doing it tough, but the data signalled a slight shift in the right direction and came on the back of the 1.7 percent lift in gross domestic product for the June quarter, she said.

Job growth increased by 4.9 percent in August, making it the strongest month since January 2022.

Meanwhile, wages continued to increase at a slower rate of 5.8 percent, compared with a 6.2 percent increase the month earlier.

"This slight relief is no doubt welcomed by small business owners who have been paying wage rises well above the long-term average (3.9 percent y/y) for the past six months," Snelling said.

The overall data suggested that small firms had been able to navigate the current economic challenges, she said.

"As we head into the final stretch of 2022, our hope would be to see these trends stabilise to give Aotearoa's small business economy a degree of certainty to begin planning for the future."

Xero's small business index, which groups together various elements such as sales and employment, fell 8 points to 133.

However, the New Zealand index continues to outperform Australia and the United Kingdom.