The past month has been a reminder of how quickly things can change, and how these ups and downs are a recurring part of life which we need to adapt to. Xero Small Business Insights (XSBI) data for July highlights how setbacks can impact even seemingly well-established economic recoveries while the COVID-19 pandemic continues.
In July, the Xero Small Business Index – part of the XSBI program – fell significantly in Australia, and slightly in New Zealand and the UK.
Restrictions in Australia impact small business performance in July
In June, the Australian Index hit a record high, but the return of restrictions across major cities saw the Index fall 41 points in July to 101 points. By the last week of July, more than half of Australians were living under stay-at-home orders as the Delta strain of COVID-19 spread. The restrictions in July impacted a number of states including New South Wales (NSW) with Greater Sydney in an ongoing lockdown, Victoria in lockdown for two weeks of July, and South Australia enduring a week-long lockdown.
Both sales and jobs growth slowed in July but this varied across states. NSW and Victoria experienced the weakest jobs results, rising just 0.4% year-on-year (y/y) and 2.7% y/y respectively. NSW also saw a decline in sales, down 0.3% y/y. Victorian sales growth slowed to 4.4% y/y after a 10.1% y/y rise in June. In contrast, jobs and sales growth both continue to be at or above average in Western Australia , rising 6.7% y/y and 8.2% y/y respectively. All of these figures are adjusted to account for low pandemic-impacted results in July 2020.
UK struggles to reach 100 points, New Zealand remains consistent in July
Over in the UK, restrictions were lifted and people celebrated ‘Freedom Day’ on 19 July. Despite businesses now able to operate without restrictions, we’re seeing the Small Business Index struggle to move closer to average performance levels. Sitting at 89 points, the slight drop in July was driven by a slowdown in sales growth to 1.7% y/y, from 8.0% y/y in June. This reflects the ongoing challenges facing UK small businesses as they rebuild after operating under tight restrictions for over a year.
In New Zealand, the consistent small business recovery continued in July with strong jobs growth and healthy sales growth. The Index dropped 5 points in July to 122, although this is still above average performance, as it has been in recent months. Small business jobs rose 5.3% y/y in July, led by manufacturing (+8.1% y/y), professional services (+7.7% y/y) and construction (+7.2 % y/y).
Unfortunately, after an undisrupted few months, New Zealand recently announced a nationwide lockdown after a Delta strain outbreak. Our August data will reveal the impact of this on Kiwi small businesses.
Keeping agile through ups and downs
These undulating times can be difficult to manage. They require us all to be agile and flexible, and use support and tools available when adjusting to any changes.
Technology has enabled accountants, bookkeepers and their small business clients to be agile in making decisions and keeping their business going through tough peaks. New academic research undertaken by the OECD and Accenture using XSBI data shows that the most productive businesses during the pandemic were more likely to use apps. The most productive 25% of firms were more than 60% more likely to have five or more apps connected than the least productive firms.
To small business owners, I encourage you to make use of the support available – whether it’s government initiatives, utilising technology to monitor your business closely, or accessing wellbeing support. Xero’s COVID-19 Business Support tool allows Australian small businesses to work with their advisors to navigate requirements for government grants and determine their eligibility. If you’re in New Zealand and you’d like some wellbeing support, the Xero Assistance Programme is available to our partners and small business customers, their employees and families.
Read more about our monthly metrics for July in our XSBI updates:
