Small-business hiring is still going strong. In the three months to September, jobs growth averaged 4.8 per cent YoY, according to the latest Xero Small Business Insights update.
September saw the largest increase in jobs in two years; jobs growth was up 5.8 percent YoY.
The largest growth took place in sectors underpinned by public sector spending: public administration (up 9.0 per cent YoY) and healthcare (up 8.6 per cent YoY).
Hospitality, on the other hand, continued on its recent decline. It saw a jobs decline of 0.2 per cent YoY and was the only industry employing fewer staff than it was twelve months prior.
While jobs growth is increasing, sales are slowing. Aussie SMEs saw a 3.7 per cent YoY increase in the September Quarter. While this figure is only about half the long term average, the US, New Zealand, and Canada all recorded negative sales growth last quarter, so Australian small businesses continue to outperform their overseas counterparts.
Why are small businesses still hiring?
Xero Economist Louise Southall suggested a couple of reasons why SMEs are still bringing on new staff despite slow sales. Firstly, they could be trying to maintain service quality in the short-term.
“Small businesses are still hiring, even as sales growth slows, because they recognise the value of retaining skilled staff to maintain service quality,” she said.
Secondly, businesses could also be looking to the future when making hiring decisions.
“Despite tighter margins, many businesses are also prioritising staff retention to keep pace with operational needs and their future growth potential,” said Southall. “Having a skilled workforce is crucial to weathering economic challenges and having your business well-positioned for when conditions improve.”
Sectors that are leading sales growth – the aforementioned public admin and healthcare, for instance – could also be driving these figures up, the economist pointed out.
Wage growth and payment times relatively steady
While jobs were up, wage growth showed little change last quarter. Wages were up 2.9 per cent YoY, compared to 2.8 per cent YoY in the June quarter.
Wage growth has been slow for a while; we also know that Australians are working more for less pay.
Australian SMEs also bore the brunt of a small payment times increase in the three months to September. Payments were an average of 6.1 days late, as opposed to 6.0 days last quarter.
As a small consolation, Australian SMEs enjoyed the shortest payment times of all the countries Xero surveyed.
“The slight increase in how long small businesses are waiting to be paid serves as a good reminder for small businesses to think about cash flow and consider offering more ways for their customers to pay,” said Theo Konstantas, Sales Director Australia, Xero. “Itʼs encouraging to see that Australian small businesses continue to weather challenging conditions, and fare reasonably well compared to other markets.”
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