February 25, 2022

New data shows the impact of Omicron on small businesses

After a strong surge in November with the lifting of lockdowns small business were feeling the pinch of lower consumer confidence in January as sales dropped.

The Xero global small business index declined six points during January to 86 points, from a high in November of 107 points due largely to the surge in Omicron cases across the country.

Joseph Lyons, Managing Director Australia and Asia, Xero, said this Index reflects the heightened volatility many small business owners have experienced these past few months.

“Xero's data tells us that small businesses can bounce back from tough times, and with COVID-19 restrictions easing, case numbers falling and national and international travel returning, there’s cause to be optimistic,” he said.

After a high in December, the index showed that sales growth had slowed considerably to 5.7 per cent year-on-year.  

Sales in NSW and Victoria were well down on the growth rates recorded in December as small businesses and customers were impacted by rising COVID-19 cases. Sales in Queensland also slowed January. The strong tourism focus on the state may have helped it to maintain a stronger sales growth rate than NSW and Victoria despite also having rising COVID-19 cases.

Industry data also reflects a significant divergence: industries such as financial services, admin services and real estate recorded the strongest sales growth while sales in hospitality fell as did those in retail and arts and recreation which saw the slowest gains, as potential customers avoided these types of venues due to concerns about rising COVID-19 cases.

The data also revealed that January saw a weaker result in job growth, with jobs actually declining 1.5 percent year-on-year. Spikes of COVID-19 cases across the country, isolation requirements and summer holidays resulted in fewer people recording the one hour of work needed to be classed as working in the Xero series. Of the biggest states, NSW was hit the hardest with jobs down two per cent, followed by Victoria falling 0.8 percent and Queensland down 0.7 percent.

Education jobs saw a sharp decline of 13.9 percent, the largest drop in jobs for the sector since May 2020 when the first wave of the pandemic hit.

Louise Southall, Xero Economist, said the fall in jobs for the education sector could reflect the still comparatively low numbers of international students in Australia as the border reopening schedule was delayed by Omicron.

Article courtesy of The Public Accountant