New Zealand small business jobs growth rebounds in September

Xero has reported that jobs at New Zealand small businesses rose 2.5% year on year in the September quarter, more than double the 1.0% growth recorded in the June quarter.

The latest Xero Small Business Insights data also showed small business sales in New Zealand increased 5.6% year on year in the September quarter, down from 9.1% in the previous quarter. Despite the slower pace, growth remained close to the historical average of 6.2%.

The figures point to a firmer labour market among smaller firms after a weaker June quarter. Employment growth was also slightly above the long-run average of 2.3%, suggesting some businesses have begun adding staff as earlier sales gains feed through.

Bridget Snelling, Country Manager - Aotearoa New Zealand at Xero, linked the rise in hiring to trading conditions earlier in the year.

"We've recorded small business employment up 2.5% year on year in the September quarter, which is more than double the 1.0% growth recorded in the June quarter and slightly above the historical average of 2.3%," said Bridget Snelling, Country Manager - Aotearoa New Zealand at Xero.

"Taking on staff is a significant commitment for a small business, so the lift in jobs growth is encouraging.

"It suggests improvements in sales earlier in the year are beginning to translate into hiring, although that won't be the experience of every business."

Sector trends

Real estate services recorded the fastest employment growth, with jobs up 7.0% from a year earlier. Administrative services followed at 6.4%, while professional services rose 3.9% and construction increased 2.8%, all above the national average.

Hospitality was the weakest sector for employment. Jobs in the industry fell 1.4% year on year, making it the only sector highlighted in the data to post a decline.

"Hospitality continues to employ fewer people than a year ago, even as other industries are expanding," Snelling said.

"With household budgets still under pressure, businesses that depend on customers' discretionary spending may have less capacity to take on additional staff."

Sales growth was led by construction, up 7.0% year on year. Administrative services followed at 6.8%, with healthcare at 6.0%.

Agriculture, which had driven a particularly strong June quarter, slowed to 4.7% sales growth from 14.3% previously. Hospitality again ranked lowest, with sales up 3.4%.

International comparison

Among the five countries tracked by Xero, New Zealand posted the strongest small business sales growth in September. Its 5.6% result was ahead of Australia at 4.3%, the UK at 3.9%, the US at 2.5% and Canada at 0.5%.

That relative strength in sales did not remove signs of pressure elsewhere in the small business economy. Wage growth remained subdued at 1.3% year on year, well below the historical average of 3.5%.

Payment times also lengthened. Average time to be paid increased by 0.3 days to 25.4 days, while average late payment times rose by 0.9 days to 5.2 days.

New Zealand still had the shortest late payment times among the five countries in Xero's tracker. Even so, the increase points to tighter cash flow conditions for some businesses as costs remain high.

Regional picture

Performance varied across the country. Canterbury led employment growth at 5.4% year on year, followed by Waikato at 3.2%.

Not all regions expanded. Northland posted a 0.5% decline in small business jobs, while Marlborough, Nelson and Tasman recorded a 0.3% fall from a year earlier.

The mixed regional picture mirrors the uneven sector data, with stronger results concentrated in parts of the services economy and construction while consumer-facing industries remain under strain. The figures suggest any broader recovery in the small business sector is not being felt uniformly.

Snelling said the outlook for hiring would depend on whether sales growth continues and whether customers settle invoices on time.

"It's good to see small businesses adding jobs, but sustained hiring will depend on sales holding up and customers paying them promptly," Snelling said.

"Longer payment times can make it harder to plan and invest, particularly when operating costs are still elevated."