The index rose 6 points in September to 127 points mainly due to strong jobs growth and record-high wages growth as well as an improvement in time to be paid — down 0.5 days to 23.2 days.
However, there was also a softer sales growth of +8.8 per cent y/y, a drop from August’s rise of 20.4 per cent.
Will Buckley, country manager, Xero Australia, said the September data showed a fantastic result for jobs growth across all industries, with this month hitting the first double-digit growth in over a year, paired with the largest wages growth since our index started.
“It’s so encouraging to see Australia’s small businesses not only having the confidence in their future to be hiring new staff but competing with larger organisations in attracting talent by paying higher wages,” said Mr Buckley.
The wage growth (+4.6 per cent) is the largest increase since the series began in January 2017. Across the industries, wages growth was led by construction (+5.6 per cent y/y) and manufacturing (+5.5 per cent y/y). Healthcare and social assistance (+3.4 per cent y/y) continued to see the slowest growth y/y.
“Wages in Australia have been slower to respond to tight labour markets compared to New Zealand and the United Kingdom, however, the past two months have seen a noticeable acceleration. This is a positive sign for small business staff, and suggests the economy is slowly starting to respond to the record low unemployment rates,” said Louise Southall, economist at Xero.
The higher wages are also attracting more people to work in small businesses, with jobs rising 10.2 per cent y/y in September — the first double-digit growth since July 2021.
“The jobs growth data is particularly positive for the hospitality and arts and recreation industries, two sectors that were hardest hit from the pandemic, but have demonstrated strong recovery over the last few months,” said Mr Buckley.
“Hopefully this will continue as we head into the summer season and as both locals and tourists have the confidence that their plans will no longer be impacted by restrictions.”
The agricultural sector, however, recorded only a rise of +1.5 per cent y/y but it is the first jobs growth since August 2021, a positive sign as overseas workers are returning to Australia.
Sales grew 8.8 per cent y/y in September, much slower than August’s 20.4 per cent y/y, however using the CPI for the September quarter (7.3 per cent y/y) as a proxy for prices, this suggests that sales volumes are still rising.
The average wait time for small businesses to be paid fell 0.5 days in August to 23.2 days. This is in line with the 23-day average recorded in the first eight months of 2022.
