[adning id=”12070″]

[adning id=”12070″]

What’s causing the biggest drop in small business performance since Covid-19?

New data from Xero’s Small Business Index (XSBI), which provides a health check into the Australian small business economy, has revealed the biggest drop in small business performance in December since the beginning of the pandemic. An uncertain economic environment of high interest rates and persistent inflation, coupled with slowing sales and wages growth, is driving softer performance.

Key insights include:

  • Small Business Index drops to pandemic-level low. A significant shift was seen in December when the Index fell 37 points to 89 points, its lowest level since September 2020 and the first time in a year the Index has dropped below the 100 level. This is the largest single month decline since April 2020, when the economy was essentially closed down by the pandemic.

  • Impact on household budgets. Multiple interest rate rises and higher-than-usual inflation reached a tipping point in December for small businesses, especially for those in the retail and hospitality sector, who expected to be busy with heightened consumer activity in December.

  • Smallest rise in sales growth in three years. Sales growth continued its slowing trend in the December quarter, averaging 1.7 percentage points less than the September result (6.8% y/y).

  • Wages growth dips in December. There was a distinct slowdown in December, with wages rising just 2.5% y/y. This result contrasts the upward trend seen at a national level, with the wage price index (WPI) rising 0.9% in the December quarter and 4.2% in the 12 months to December, suggesting that small business owners are currently unable to compete with larger businesses on pay increases.

  • Small businesses continue to add jobs. A modest pick-up in jobs growth in the final few months of the year (3.5% y/y for the December quarter) partially offset the drag on the Index from sales and wages. Jobs growth was above the pre-COVID average for this series (3.0% y/y), and showed a moderate increase when compared to the September quarter (2.7% y/y).

  • Payment times remain steady. Payments were made 6.3 days late in both the December and September quarters


Leave a Reply

Your email address will not be published. Required fields are marked *


Get breaking news delivered
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?