Xero Small Business Index Shows Resilience Amid Economic Challenges

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Xero’s latest data from the Small Business Index illuminates Australian small business performance from February to June 2023, revealing signs of resilience despite economic challenges.

According to the index, the average score for the first five months of 2023 was 120 points, surpassing the previous year-end result of 112 in 2022. Despite a slowdown, small businesses achieved an 8% year-on-year sales growth this quarter, outpacing the long-term average of 7.8%.

“We know it has been a difficult start to the year for many Australian small businesses, but it is promising to see there are positive signs, such as easing wage pressures, in the latest data from Xeroʼs Small Business Insights,” said Xero Australia Country Manager Will Buckley.

On the wage front, the report shows a decrease in wage growth from 3.9% at the end of 2022 to 3.1% year-on-year. However, the hospitality and construction industries bucked the trend, recording the largest wage rises at 4.4% and 4.3% year-on-year.

Despite the positive trends, hiring remains a challenge for small businesses. Job growth statistics in the quarter averaged 2.3% year-on-year, significantly lower than the 3.4% year-on-year recorded in 2022. The hospitality industry ranked the second weakest in job growth at 0% year-on-year, just behind the real estate sector.

Payment times for small businesses remained stable throughout the first five months of 2023, with an average waiting period of 23.0 days to be paid, except for June.

“Small businesses have shown resilience in the face of interest rate rises and high inflation, but while household budgets are tight at the moment, we encourage Australians to continue supporting small businesses in their communities in whatever way they can,” Buckley added.

The Xero Small Business Index is a crucial tool in assessing the health of small businesses in Australia. It provides insights that can help shape policies and initiatives to support their growth and success.

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