Data from the Xero Small Business Insights (XSBI) index has revealed an improvement in small business performance, but economic pressures continue to challenge hospitality businesses, being the only industry to record a quarterly sales decline.
The XSBI index investigates the health of Australia’s small business economy, and saw many businesses enjoy sales growth in the three months to June, especially around the Easter period.
While quarterly data recorded improvements in performance for small businesses, sales growth was volatile and national sales saw a sharp decline in June, which could create more challenging conditions for operators in the months ahead.
Nationally, small businesses recorded a rise in sales growth of 12.8 per cent year-on-year in April, compared with a 2.5 per cent increase in May and a decline of 3.5 per cent in June.
Although the national outlook was positive from a quarterly perspective, hospitality was the only industry to record a decline in quarterly sales performance of 0.6 per cent year-on-year.
The hospitality industry also recorded a decline in hiring, with a 0.5 per cent fall year-on-year (based on the June quarter) indicating that small business have fewer jobs than they did a year ago.
Hospitality small businesses have recorded job declines for the last four quarters, and this data puts the hospitality sector below the national jobs growth average of +4.5 per cent year-on-year.
Although the hospitality sector recorded a fall in hiring, it continues to pay the largest wage increases across all industries, higher than the national wage growth average of 2.9 per cent year-on-year.
With hospitality small business wages increasing at 3.6 per cent year-on-year, while hiring declines, Xero suggests that this may be caused by a weakness in jobs due to a lack of skilled workers, as opposed to businesses choosing not to hire.