Global small business platform, Xero has released data from its Small Business Index, showing a decline of six points during the first month of 2022 to 86 points, largely attributed to the surge in Omicron cases.
The decline is a significant reduction from the high in November (107 points) and comes after two months of strong sales growth, when small businesses made the most of reduced lockdown restrictions and festive season spending.
“Looking at January’s decline after the highs of Christmas trading in November and December, there’s no doubt this Index reflects the heightened volatility many small business owners have experienced these past few months,” Xero managing director for Australia and Asia, Joseph Lyons said.
“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.”
In line with Christmas spending, December saw a growth in sales almost double its average pace at 15.1% year-on-year. Following the festive period sales growth slowed to 5.7% YoY in January – an expected dip as the number of Omicron cases grew significantly.
Industries such as financial services (16%) admin services (15.8%) and real estate (11.7%) recorded the strongest sales growth. Meanwhile, sales in hospitality fell (-7.5% and retail (0.7%) and arts and recreation (+1.3% y/y) saw the slowest gains.
The Standard Store in Surry Hills, NSW experienced its best December on record and Nicole Reindorf believes the growth was due to people giving a gift over dining out.
“A lot of customers had connections to someone with Omicron and were wary about how their Christmas would look. I think that is why they wanted to make sure their loved ones would have something under the tree to open. When January arrived, it was a whole different story… the street was dead, it was definitely a shadow lockdown,” she explained.
“Following the Christmas spending period, it was very quiet, and a lot of our staff were also sick and unable to work. There were also no tourists around. In early January, we actually had to shut the store against regular trading hours due to a staff shortage from Covid.
“With restrictions continuing to ease, case numbers falling and travel returning, we’re feeling cautiously optimistic about the year to come. I do think consumers overspent in the last quarter of 2021, and now with travel back on the cards, they’re beginning to think ahead. We have new deliveries in store, so that always helps, it feels as though we are coming out the other side.”