International data indicates small business owners will face staff shortages, reduced cash flow and the potential closure of their workspace as the Omicron outbreak peaks over the next few weeks.
(File image) Photo: RNZ / Cole Eastham-Farrelly
The Xero Small Business Index fell to 97 points across December and January, ending a run of three consecutive months with above average scores in the 100s.
Xero managing director for New Zealand and the Pacific Islands Craig Hudson said that while New Zealand's Small Business Index remained close to average, Australia's 86-point reading and Britain's 85 points indicated how Omicron outbreaks had negatively impacted small business operations.
Craig Hudson. Photo: Supplied
"The international data is a warning of potential things to come for New Zealand businesses," Hudson said.
"With Omicron forcing Aotearoa into red [traffic light setting] on 23 January, this data set only captures about a week of the direct impact Omicron was starting to have on the community."
He said New Zealand's downturn was so far largely due to small business sales, which slowed to 4.6 percent year-on-year (y/y) in January after several strong months as lockdown restrictions ended.
"November and December saw double digit sales growth as Auckland emerged from the Delta lockdown, with businesses able to begin reopening, and Kiwis encouraged to spend locally to help small business recovery," he said.
However, job growth remained above average levels at 4.1 percent y/y with wage growth also up 3.8 percent y/y, following several strong months.
"As Omicron continues to move through the community, small business owners will face staff shortages due to employees needing to isolate, reduced cash flow, and potential temporary closure if their workspace can't be used or their entire workforce is taken out," he said.