The latest Xero Small Business Index rose to six points in November to 104, taking the Index above 100 for the first time since July 2021. This increase is being attributed in part to the further easing of restrictions in NSW, Victoria and the ACT, placing overall small business performance just above the national long-term average.
The rise in the Index was also largely driven by a surge in small-business sales, up 11.1 per cent year-on-year (y/y), more than double the 5.1 per cent y/y rise in October.
Nationally, the Index showed sales growth of 11.1 per cent year-on-year (y/y), adjusting for base effects in November, which is well above the long term average of +7.8 per cent y/y. The results can be attributed to the ongoing easing of restrictions in NSW, Victoria and the ACT, as well as retailers urging customers to shop early this Christmas to avoid shipping disruptions and delivery delays. All industries experienced strong sales growth in November with retail sales increasing by +14.4 per cent y/y, the strongest result since March 2021.
The time small businesses had to wait to be paid by customers remained relatively stable, at 23.4 days in November, up from 23.2 days in October. The late payments measure, which tracks the average number of days late that invoices are paid, was up 0.1 days to 6.6 days.
Jobs growth remained in positive territory in November up 1.1 per cent y/y, however, it appears to be slower to recover than sales, and wages growth was marginally higher in November at 2.8 per cent y/y. Arts and recreation (-3.4 per cent y/y) and hospitality (-4.2 per cent y/y) are yet to return to positive jobs growth despite an improvement in sales during November. Healthcare (+4.9 per cent y/y) and professional services (+3.7 per cent y/y) continue to be the most job resilient sectors.
“It is great to see the November Xero Small Business Index showing an improvement in the overall performance of small businesses,” Louise Southall, Xero Economist, said. “Yet, even though this data is less than a month old, small businesses are once again facing heightened uncertainty as this pandemic takes another turn.
“Experts are still working out what Omicron means from a health perspective which makes it impossible to predict what the economic impacts will be at this stage. But one thing is clear – small businesses need our ongoing support this holiday period to help them through yet another challenging few months,” Southall added.