Newly-released data reveals that small-business revenue growth has continued to slow down as government support policies wind down. Nevertheless, the number of jobs generated by the small-business sector has risen and remains above pre-pandemic levels, even taking into account the usual summer seasonal drop.
According to the latest Xero Small Business Insights (XSBI) study, prepared in partnership with Accenture, small-business revenue in Australia was 0.9 per cent lower in January 2021 compared to January 2020. This follows a 2.2 per cent rise in the year to December 2020. While the result is the fourth consecutive month of slower and below-average growth, it is the first year-on-year fall in revenue since May 2020.
This January result comes two key support payments from the Federal government, JobKeeper and JobSeeker, were reduced at the start of this month and JobKeeper set to wind up at the end of April.
Industries that experienced the largest declines in revenue continue to be arts and recreation (-10 per cent year-on-year) and hospitality (-5 per cent year-on-year), although both figures were noted to be an improvement on December’s revenue declines.
New South Wales (-1.9 per cent) and Victoria (-1.3 per cent) both recorded year-on-year declines, in contrast to Western Australia (+4.5 per cent), Queensland (+1.8 per cent) and South Australia (+0.2 per cent). Victorian revenue remains only 0.4 per cent points below the national revenue result and was better than NSW (-1.9 per cent year-on-year ).
“Victorian small businesses were dealt a particularly rough hand in 2020, so it’s really pleasing to see the revenue gap having almost closed in January, a period of minimal restrictions,” Trent Innes, Managing Director Australia and Asia at Xero, said.
“February’s five-day snap lockdown in the state may be cause for change, however, and we will need to await next month’s figures to reveal the extent of its impact.”
Small-business jobs fell 3.3 per cent month on month in January, with this pattern seen across all industries and in all states and territories, a fact Xero attributed to quiet summer trading and temporary changes in reporting practices, and one consistent with job levels observed during the year prior. The number of jobs ended two per cent higher in January compared to the equivalent week a year ago and ended the month 0.1 per cent above pre-pandemic levels.
“The seasonal fall in jobs is something that happens every year,” Innes said. “Small businesses often close for an extended period over summer, while some businesses temporarily stand-down employees in response to quieter trading, especially casual workers.
“Importantly, the jobs outlook still remains positive with small business jobs ending January two per cent above the equivalent week in 2020,” Innes added. “This provides a clearer picture of what is actually happening.”