As lockdown conditions eased across the three jurisdictions, the Xero Small Business Index rose five points across October.
It means that the index is now sitting at 94 – not far below the index average of 100.
Despite the labelling of the increase as “modest” – from a previous 2021 low of 89, Xero did explain that “it provides an early indication of what can be expected after a full month of eased restrictions”.
Nationally, the index showed a sales growth of 4.4% year-on-year (y/y), after adjusting for base effects, which was a slowdown from +8.2% y/y in September.
Despite all states seeing slower sales growth in October, Victoria was noted as continuing to record the weakest results – with a sales increase of just 0.6% y/y, despite lockdown restrictions easing from 21 October.
Tasmania has weakened considerably over the month, delivering +1.9% y/y sales growth, down from the +10.4% y/y it recorded in September.
In contrast, NSW reported sales growth of 4.8%.
Xero managing director Australia and Asia, Joseph Lyons, has conceded that the latest findings highlighted the likelihood that it would “take a while" for small businesses impacted by lockdowns to get back on their feet.
“As we lead into the festive season and summer holidays, it’s really important that Australians continue their support of small businesses, shopping locally wherever they can,” he expressed.
“With density limits easing and borders reopening, it’ll also be great to see holidaymakers exploring their own backyard and supporting local tourism operators while doing so.”
Despite the lack of sales growth, Xero reported that jobs growth and wages growth were showing positive signs.
Nationwide, small business jobs rose a modest 0.1% y/y, adjusting for base effects in October. This slight rebound came off the back of a decline of 1.0% y/y in September.
Mr Lyons said “we were still witnessing a two-speed economy in October”.
Western Australia (+5.1% y/y) and Queensland (+3.2% y/y) continue to record solid jobs growth, while the same couldn’t be said for lockdown-impacted areas.
The ACT reported -2.8% y/y jobs growth, which is worse than the -2.3% y/y seen in Victoria and -1.2% y/y growth in NSW.
Xero Economist Louise Southall acknowledged that “it will take time for those heavily impacted small businesses to rebuild jobs, as they still deal with ongoing restrictions such as patron limits”.
She believed “the summer holiday period is a great opportunity for people to show their support for local hospitality and arts and recreation small businesses”.
Over the same period, wages nationwide rose 2.7% y/y. It continues the upwards trend, after Xero had reported 2.6% y/y wage growth in September and 2.5% y/y growth in August.
According to the report, this puts wages almost back at their pre-pandemic average.