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Kiwi SMES show strongest growth in five years, Australian counterparts dawdle

By Pattrick Smellie, Wed 5 Nov 2014
FYI, this story is more than a year old

New Zealand's small and medium-sized businesses are recording their fastest sales growth since 2009 compared to a steady-as-they-go effort by their Australian counterparts, according to the Five Year MYOB Business Monitor report.

The MYOB report draws on results from its biannual national survey of more than 1,000 New Zealand SMEs over the five years from July 2009. In the latest survey almost twice as many businesses reported revenue growth as decline, accelerating a turnaround that began in February 2012. Some 39 percent of companies surveyed had increased revenue as at September, up four percent on February 2014. Those report a decline fell 2 percentage points to 19 percent.

MYOB chief executive Tim Reed said New Zealand SMES have been steadily boosting revenue from a low in 2009 when only 22 percent reported growth.

"In contrast, growth in the SME sector in Australia has remained relatively static, with the number of businesses reporting growth peaking at just over a quarter in 2010/2011, before falling to its current level of just 21 percent," he said.

Australia continues to struggle with the end of its mining boom while New Zealand has enjoyed one of the highest economic growth rates among OECD countries this year on the back of the Canterbury rebuild and Auckland boom.

Reed said another factor was stable government and business-friendly policies in New Zealand that had boosted business confidence, in contrast to the political instability in Australia in recent years. There are nascent signs of a recovery across the Tasman. The number of Australian SMEs reporting a revenue decrease hit a peak of 41 percent in May 2012, before falling to a five-year low of 31 percent in the latest survey.

Much of New Zealand's SME sector recovery has come without significant growth in either wages or employment.

"In fact, slightly fewer businesses are intending to hire more full-time or part-time employees in the next year than were in 2009," Reed said. One in five of those surveyed said they intend increasing wages and salaries in the next year while 10 percent plan to increase full time staff numbers and 13 percent to lift part-time positions. But Reed said that was no different to five years ago and the stunning growth rates now being seen in New Zealand were the result of improved productivity. Companies were investing more in technology and doing more with the same number of staff, he said.

However, with low unemployment and stable growth, it was likely there would be an increase in both wage rates and new hiring intentions in the SME sector in the near future, he said. .

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