By GEORGINA BOND
Small businesses' growth is still outpacing that of the wider economy - but the gap is narrowing.
Results of the National Bank Small Business Monitor, released today, show economic activity for small to medium enterprises (SMEs) rose 4.6 per cent year on year in the quarter to June, compared
with growth of 4.4 per cent for the economy as a whole.
National Bank economist Lauren Rosborough said there were many indications SMEs would underperform the economy as a whole over the next year. She said with growth still well above trend for the ninth quarter in a row, some SMEs would be feeling constrained.
A lack of skilled employees was still one of the most pressing concerns facing the sector and SMEs had been hit harder by rising wage bills than other firms.
Recent changes in Government regulations and legislation could have contributed to wage increases for SMEs in the services industry.
Rosborough said activity in the retail and construction sectors, which had largely driven SME growth during the past 18 months, had already started to cool.
Lower net migration inflows and higher interest rates would have a dampening effect and were expected to continue to moderate the strength of the housing market.
Rosborough said the changes reflected a rotation of growth within the sector. High commodity prices should support SMEs in the agriculture sector and those servicing it. The manufacturing sector had also picked up.
