New data points to SME recovery in Australia

The latest data from global small business platform Xero’s latest Small Business Insights (SBI) program reveals that small businesses continued to add jobs in July, the second month in a row – albeit at a modest pace of 0.5% month on month. Small business revenue also recovered strongly in July and is now only 1.9% lower than a year ago, after being 10.9% lower than a year ago in June.

The recovery in small business revenues is being led by the manufacturing sector, where revenues were 11% higher than July 2019. This is the second consecutive month that the sector has reported positive annual revenue growth. The gains were recorded in all states, led by manufacturers in NSW.

Small businesses in Victoria recorded more subdued revenue growth in July at 3.2% lower than a year ago. The state’s small businesses also saw a 2.5% month-on-month fall in jobs in July, led by declines in hospitality and arts & recreation, due to the return to lockdown. On the other hand, the smaller population states of Western Australia (+1.8%), South Australia (+1.9%) and Queensland (+2.5%) recorded higher small business job gains faster than the national average.

“Our July data highlights how the different levels of restrictions in states across Australia have impacted the pace in which small businesses rebound,” said Trent Innes, Managing Director – Australia and Asia at Xero. “While the impact of Melbourne’s return to lockdown muted the overall revenue and job growth figures across the country in July, the data signals how small businesses can play a key role in jumpstarting our nation’s economy.”

“It is encouraging to see homegrown manufacturers continuing to drive small business recovery. With Melbourne entering stage four restrictions and the rest of Victoria entering stage three in August, we are likely to see small business performance in some of the state’s biggest sectors – like construction and retail – hit the hardest in our next Small Business Insights data.”