28 Oct 2020

Small business earnings up year on year, despite Covid-19

12:15 pm on 28 October 2020

The manufacturing and construction sectors are the big revenue winners this side of lockdown, according to small business data from the accounting software firm Xero.

Closeup of a skilled carpenter sawing a piece of wood with a table saw while working alone in his woodworking studio

Photo: 123rf

September figures show year-on-year revenue was up 3.4 percent across the board, but for small businesses involved in manufacturing revenue was up by 11 percent.

Similarly, construction was up 9 percent and retail trade up 8 percent.

Xero New Zealand managing director Craig Hudson said the strength of these sectors was impressive.

"Every month manufacturing has been outstripping the other sectors... and the anecdotal conversations with tradies for instance - they're booked up for many months now - so lots of people obviously aren't travelling, and there's not many other things to spend money on, so they're doing renovations.

"So that's positive for the other two sectors, but the manufacturing one remains a real surprise to us."

Regionally, all parts of the country except for Queenstown and Otago saw revenue rise year-on-year. Queenstown was down 10.5 percent.

"Queenstown and Otago are still doing it tough, and I can't see any change in that in the near future. Even though we're flocking to Queenstown for instance, we're not spending anywhere near enough per day compared with what international tourists would have been spending."

Hudson said revenue growth usually flowed through to job creation. In September the number of people employed by small business owners was 1.8 percent lower than pre-Covid-19 levels.

But that level has risen from August, when job numbers were 2.9 percent below pre-Covid-19 levels. However, one exception appeared to be the hospitality sector, where revenue grew from August to September, but job numbers did not.

Hudson said that pointed to a concern for staff wellbeing.

"Their revenue is growing but their staff numbers aren't growing at the same rates, and some of the conversations I've been having with hospo leaders and owners is that they are working harder than they've ever worked before - and they're uncertain about the future, so they're holding off on hiring."

"My fear is; how long is that sustainable for those people in hospitality... and what does that look like as we head into the busy summer months?"

Hospitality revenue year-on-year was down 7 percent.

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