Xero’s latest Small Business Insights update

Insights include positive jobs growth but slowing sales and increasing late payments

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The executive summary of the dataset is now available, and the full analysis (broken down by sector and region) is also available on the Xero Small Business Insights (XSBI) website

Key statistics

  • The overall index fell to 85 points – its lowest reading so far this year.

  • After seeing the first jobs growth of the year in June, it has risen again by 0.8% year-on-year (y/y) across the last three months to September, marking four months of consecutive employment gains for small businesses. While the north west (+3.7% y/y) and London (+2.5% y/y) showed the strongest growth, Wales (-3.5% y/y) and East Midlands (-1.9% y/y) still saw a decline in employment.

  • However, the employment boost was overshadowed by stagnant sales growth in the past three months. Sales rose just 1.1% y/y in September, and 2.1% y/y across the three months, a stark fall from June’s 8.9% rise and an average of 7.3% y/y in the first half of 2023. Using the September CPI as a proxy for prices, sales actually fell 4.3% in the three months to September.

  • Sectors most dependent on discretionary spending were most affected over the last quarter. Retailers showed the largest decline (-2.4% y/y) in sales in the three months to September, with education and training falling by 0.2% y/y after rising 8.6% y/y in the first half of the year. Small businesses in Wales and the north east of England showed the flattest sales trajectory, growing just 0.3% y/y and 1% y/y respectively.

  • Late payments hit a three-year high. On average, small businesses waited 29.4 days to be paid by their customers in the three months to September, which is 0.5 days longer than the average across the first half of 2023. This metric has continued to rise over recent years.

  • The late payment times are particularly concerning, with small businesses paid 7.7 days late in September – the highest level in three years. This dragged up the three-month average to 7.1 days late, which is longer than in the first half of 2023 (6.4 days). We will need more months of data to understand if this is a firm trend. 

Read the executive summary of the dataset. The full analysis (broken down by sector and region) is also available on the XSBI website.