Small business revenue rose 5.1 per cent year-on-year in February, after recording a revised 1 per cent rise in January, a jump in revenue that represents slightly faster growth than the pre-COVID-19 average of 4.6 per cent year-on-year.
Revenue growth has been positive for nine consecutive months, and in all but two of those months revenue growth was faster than the pre-crisis average.
Xero today released new data on what it describes as the health of Australia’s small business sector in February 2021. The findings are based on its Xero Small Business Insights (XSBI) program, which it runs in partnership with Accenture.
Based on anonymised and aggregated data of hundreds of thousands of customer records, the latest XSBI analysis reveals year-on-year small business revenue growth for February was more than four percentage points above January’s result. Small business jobs also rebounded following the seasonal drop.
According to the study, Arts and recreation, and hospitality and tourism continue to be the two weakest industries, both recording an 8 per cent dip in revenue year-on-year in February. All other sectors measured by XSBI recorded positive revenue growth, with the rental, hiring and real estate industry (+15 per cent year-on-year) and manufacturing (+13 per cent year-on-year) leading the pack.
Trent Innes, Managing Director Australia and Asia, Xero, said, “Pausing to reflect on it being one year since COVID-19 restrictions were first enforced, it is remarkable to see the Australian small business sector enter its ninth consecutive month of revenue growth. The latest Xero Small Business Insights analysis reminds us of the resilience of the sector in the face of the pandemic — but that some industries have been more fortunate than others.
“As the JobKeeper program has drawn to a close, for industries including arts and recreation, hospitality and tourism, it will be critically important for Australians to get behind them in any way they can. With Easter approaching, it’s another good excuse to support small business when you shop or travel.”
In February, small business jobs rebounded from the seasonal fall recorded in January, jumping 0.5 per cent. This means jobs in small businesses are now 1.6 per cent above where they were in the first week of March 2020 when the pandemic began to impact the economy.
The industry breakdown shows that the small business employment recovery is becoming more widespread. Industries that have been heavily impacted by business trading restrictions, such as hospitality, and arts and recreation, now have job numbers that are only two per cent and one per cent lower than they were when the pandemic hit, after falling significantly during the height of the pandemic last year.
The strongest industries for job growth since the first week of March 2020 are healthcare (+6%), manufacturing (+6%), construction (+ 4%), retail trade (+3%), and professional services (+2%).
Casual employment has also rebounded from its usual seasonal dip in January and is now 1.2 per cent higher than it was in the first week of March 2020.
Both Western Australia and Victoria experienced snap lockdowns in February. As a result, both states recorded an immediate fall in jobs as non-salaried staff in closed businesses did not receive a payslip. Despite this, the February result also shows a positive response in jobs as soon as restrictions were eased again and staff returned to work.
In Western Australia, small business jobs fell 0.3 per cent over the month, which is a significant recovery from the trough of 6.3 per cent during the lockdown period. Victoria, which experienced a lockdown later in February, recorded a jobs fall of 0.7 per cent over the month. Having less time to recover, Victoria recorded weaker recovery at the end of the month. The Western Australian experience — and South Australia’s during November — suggests Victorian jobs are likely to pick up again in early March when cafes and restaurants reopened.
Revenue growth in both Western Australia (+3.7%) and Victoria (+2%) was slower than the national average of 5.1 per cent year-on-year — likely a temporary result due to the local lockdowns.