The latest edition of the Xero Small Business Index reveals that Australia’s small businesses continue to perform above average, especially in terms of jobs creation and revenue, for the fifth consecutive month.
The report noted that comparted to the figures in May 2020, small-business jobs rose 5.7 per cent year-on-year in May 2021. This marks the second consecutive month where employment growth has been above five per cent year-on-year, which, according to the report, highlighted the significant contribution of small businesses to Australia’s jobs recovery in 2021.
All industries recorded positive jobs growth, including the hospitality and arts and recreation industries which recorded an increase of 3.3 per cent and 4.5 per cent year-on-year respectively.
Sales in small businesses also increased by 6.3 per cent year-on-year during May 2021, though this is slightly down compared to the 11.3 per cent and 8.0 per cent year-on-year growth recorded in March and April respectively.
Healthcare (+12.8 per cent) and retail trade (+10.7 per cent) were the strongest performing industries for May 2021, year-on-year. Hospitality sales rose 8 per cent year-on-year as but other pandemic impacted industries continue to remain soft, most notably arts and recreation sales which fell to 1.4 per cent year-on-year.
“Xero’s data continues to highlight the strong contribution small businesses are making to Australia’s economic recovery,” Trent Innes, Managing Director Australia and Asia at Xero, said. “It’s pleasing that some of the hardest hit businesses, like those in hospitality and retail, are now adding to this recovery as we begin to see an uptick in jobs and sales across these industries. The figures are a stark comparison to the same period last year.”
The time it took for small businesses to be paid fell in May 2021, by 0.5 days to 22.9 days. This is only the second time this measure has fallen below 23 days since Xero Small Business Insights began in January 2017. There was a similar decline in the late payment measure, which fell 0.4 days to 6.3 days. This is 3.6 days faster than the peak of the pandemic, but it still means small businesses are being paid almost a week late on average.
Wages in small businesses rose 3.6 per cent year-on-year according to the report, with the construction industry experiencing the strongest wage growth at 3.4 per cent. However, the report was not able to look at the impact the Victoria lockdown on May 27 had on small businesses.
“The most recent Victorian lockdown has been challenging for our small business sector, with some industries having to shut their doors once more due to the restrictions,” Innes said. “While we may see a drop in Victorian small-business jobs and sales in next month’s Index update, previous Xero Small Business Insights analysis has shown how resilient our small-business community is. We’ll be looking to our June 2021 metrics to see the full extent of the lockdown on Victorian small businesses.”