Small businesses on the Hibiscus Coast and across New Zealand are grappling with declining sales, according to the latest Xero Small Business Insights data.

Sales fell 1.5% year-on-year (y/y) in the June quarter, marking the largest drop since the initial Covid-19 lockdown in May 2020.

"After what looked to be a more positive start to 2024, this sharp decline in sales suggests small businesses are not faring so well," said Paul Churchman, Xero NZ Head of Sales.

Sales in May and June experienced significant decreases, with June seeing an 8.3% y/y fall.

All industries reported declines, with hospitality, construction, and retail trade being the hardest hit, down 10%, 10%, and 11.4% respectively in June.

These sectors are particularly sensitive to high interest rates, which have led consumers to cut back on non-essential spending.

Churchman highlighted the broader economic pressures, noting, "The latest inflation figure from Statistics New Zealand was 3.3% for the June quarter. Adjusting the nominal XSBI data to real data, this indicates small business sales are even weaker, down 4.8% in the June quarter."

Regionally, Waikato, Taranaki, and Manawatu-Whanganui saw the sharpest drops, with Waikato recording a 13.5% y/y decline in June.

However, Northland experienced a slight rise of 1.5% y/y for the quarter.

Despite the financial strain, small businesses are still attracting staff.

Jobs rose 6.7% y/y in the June quarter, although this is a slight decrease from the previous quarter's 7.0% rise.

"This steady jobs growth reflects how small business owners remain hopeful about the future," Churchman commented.

Wages have also grown, with a 3.6% y/y increase, the largest since March 2023.

Construction and other services sectors offered wages above the national average.

Churchman emphasised the need for small businesses to manage their finances carefully, urging them to work with financial advisors to navigate these challenging times.