By ELLEN READ
Boosted by a fast-growing retail sector, small businesses have outstripped the wider economy in the year to September.
The latest National Bank of New Zealand Small Business Monitor shows the sector roaring ahead at an annual growth rate of 4.5 per cent while the economy as a whole
only managed an estimated 4 per cent (this will be confirmed when GDP data is issued tomorrow).
The bank measures the activity of firms with fewer than 20 employees.
The sector struggled more than the overall economy in 2000 and last year, as consumer spending slowed and construction activity shrank.
But in the year to September, it outperformed the economy on an annual growth basis - due to high exposure to the retail sector - despite having slowed a little in the third quarter, the bank said.
"It's been an absolutely fantastic performance from the small business sector," said the National Bank's chief economist Dr John McDermott.
A tighter labour market was coming through as a constraint, but the flip-side was that those who had jobs were feeling more secure and willing to spend money.
"Small businesses in the urban towns where people are spending money have done very well," McDermott said.
Traditionally when things were bad economically, small businesses did not have the balance sheets to weather the storm.
Although growth was expected to slow next year, it would be more of a moderation than sharp decline, so small businesses should continue to prosper.
