Small business sales and jobs are still growing but losing momentum following a reasonable start to the year, according to the latest Xero Small Business Insights data from Xero, a global small business platform.
Small business jobs growth for the September quarter stood at 1.1% year-on-year (y/y) but slowed consistently over the quarter – from 1.6% y/y in July to 1.1% y/y in August and just 0.7% y/y in September. This likely reflects both softer sales performance and heightened levels of uncertainty, with shifts in international trade policy and concern about potential tax rises in the Autumn Budget.
With the outlook remaining unclear, there are signs that small businesses are adopting a more cautious approach to hiring. In the three months to September, the proportion of small businesses growing their workforce fell to 26.4% in the quarter, its smallest share since mid-2020 when the UK was in lockdown. Meanwhile, the number of small businesses downsizing their workforce grew to 24.4%, the highest level in two years.
Small business sales also continued to grow at a slower rate in the September quarter. Sales were up 3.1% y/y, although this was the smallest rise in 18 months and below the rate of inflation, making the result a decline in inflation-adjusted (real terms). In some good news for small businesses, the Bank of England’s interest rate cut did offer some respite, with sales spiking at 4.5% y/y in September, up from only 1.1% y/y in August.
