Report suggests NZ small business revenue has rebounded well post-lockdown

A new report from accounting company Xero suggests New Zealand's small businesses are doing much better than those in Australia and the UK, following the Covid-19 lockdown measures.

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Accounting firm Xero issues the report. Company official Craig Hudson spoke with Breakfast about the results. Source: Breakfast

Xero's Small Business Insights report, released today, paints a cautious picture of rebounding small business revenue, with the caveat being a slight dip in small business jobs following the tightening of Wage Subsidy requirements.

After steep decline in revenue between March and April during the lockdown, revenue bounced up somewhat in May, and in June it recovered to the same level as was seen in the same month last year.

Average small business revenue to June 2020, from Xero's Small Business Insights report. Source: Supplied

Craig Hudson, Managing Director for New Zealand and Pacific Islands at Xero, says it’s too early to celebrate a lasting recovery, but the data is promising.

"This revenue recovery shows what's possible when New Zealanders spend locally," Mr Hudson said.

"It's also encouraging to see that, despite a sharp increase during the lockdown, the average time for businesses to be paid has fallen to 26.9 days - only a day higher than in February.

"It's important to note the data is an average across all small businesses - while some businesses are doing extremely well post-lockdown, which is helping drive revenue back to 2019 levels, others are still hurting and need as much support as possible."

The data suggests that while New Zealand saw the most severe drop in small business revenue during lockdown, it has also seen the quickest recovery when compared with Australia and the United Kingdom.

Following the lockdown period, New Zealand experienced a small recovery in the number of jobs, but Xero's data suggests that since Wage Subsidy eligibility criteria were tightened during the extension phase, the number of jobs has fallen by 2.2 per cent.

"Compared to Australia and the United Kingdom, New Zealand small businesses have kept more people in employment," the report says.

"At the end of June, the New Zealand small business sector had 3.6 per cent fewer jobs than pre-crisis levels - this compares to 6.8 per cent fewer jobs in the Australian small business sector and 8.5 per cent in the UK."

Mr Hudson said "although we are doing better than many expected, now is not the time for Kiwis to be complacent in supporting small businesses".

"For those who can, spending with locally-owned small businesses and paying your bills on time is vital.

"Small businesses are more than just numbers - they are about livelihoods and people and at the moment they are doing it tough.

"Losing a job can be devastating, so we need to do all we can to support them and help them through this incredibly challenging time."