Otago saw the largest increase in jobs filled at 10.9 percent year-on-year, followed by Canterbury. Photo: 123RF
Jobs growth in small businesses remained strong in the June quarter despite sales flatlining, according to new data from accounting software company Xero.
The company's latest small business index showed the number of jobs grew 7.3 percent year-on-year in June, though wage growth cooled.
The strongest average monthly jobs growth was in the other services category and hospitality, with real estate the weakest sector.
Otago saw the largest increase in jobs filled at 10.9 percent year-on-year, followed by Canterbury.
Xero New Zealand country manager Bridget Snelling said alongside strong jobs growth, wage growth cooled to 2.9 percent year-on-year.
"This downturn from the significant peaks seen throughout 2022 will likely be welcome news for many small business owners across Aotearoa New Zealand," she said.
"Many small business owners will be relieved to see wage growth begin to realign with the long term average (+3.9 percent year on year) after peaking at 6.5 percent year-on-year in November.
"However, lower wages could also point to more pressure for household budgets and a potentially further flattening of sales."
Sales figures rose 5.9 percent year-on-year and grew on average just 3.9 percent in June, consistent with a recessionary environment, Snelling said.
"While 5.9 percent year-on-year growth may seem positive, this is still a step behind the latest inflation figures.
"The country officially entered recession during the March quarter, which appears to be having a negative impact on both business confidence and sales.
"As households continue to struggle with the cost of living, it's only natural we see people reduce their discretionary spending."
Sales figures were down from a 4.2 percent average for the March 2023 quarter, and well below the 12.9 percent year-on-year average over the whole of 2022.
Snelling said the index showed small businesses were resilient, but they would need to be savvy going forward.
"They continue to walk the tightrope to balance books and maintain their bottom line while still providing for their staff and themselves.
"We can take solace in the fact the official cash rate seems to have plateaued at least for the time being, which hopefully translates into a slowdown in mounting financial pressures for households and business alike.
"We encourage small business owners to consider the digital tools available to them in order to manage their cash flow during these trying times, as well as encouraging Kiwis to pay their invoices on time where possible to support the flow of money through the small business economy."