Small business economy fallen from mid-2014 highs

New Zealand’s small and medium-sized business growth has pulled back from highs seen in the middle of last year but the brakes have not been slammed on yet.

The March MYOB business monitor shows SME growth has levelled off in the last six months, with 32% of 1000 businesses surveyed seeing revenue increase in the 12 months to February – down from a five-year high of 39% in September. However, more businesses are reporting stable revenue, up to 44% from 38%.

The Colmar Brunton-conducted survey shows 40% of SME operators expect revenue to increase in the next 12 months, while 11% expect revenue to fall. In the current quarter, 37% have more work or sales in the pipeline and 13% have less.

The Christchurch rebuild efforts mean SMEs there have the highest growth levels, although revenue increases have fallen off somewhat in the last six months. Auckland businesses are only slightly off the pace they set last year, while Wellington remains below national average.

Although many of the regions found growth has slowed from peak levels last year, Northland reports high levels of stability, with 70% of business operators seeing revenue performance same as last year.

SME operators are most concerned about cashflow; just one-fifth said they will consider paying staff more this year and 7% will take on more fulltime employees.

MYOB New Zealand general manager James Scollay says the SME economy has reached a point of more manageable growth, after coming off mid-2014 highs.

“Rather than the brakes going on, the SME economy looks to be settling into a period of sustained growth, especially when you take into account businesses’ projections for growth this year as well as the work they have on in this quarter.”

Manufacturing down, logistics up

Manufacturing has come a long way off last year, with 28% of SMEs reporting improved revenue performance in the year to February, compared to 43% in September. A quarter are reporting falling revenue.

Farming also took a hit, from falling commodity prices and drought conditions, with 31% primary sector SMEs recording a revenue drop as opposed to the 26% that gained.

However, the logistics sector jumped from 24% of SMEs having revenue increase in September, to 33% in February. The construction sector maintained level growth at 35%.