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New Zealand Business Demography Statistics: At February 2009
Embargoed until 10:45am  –  30 October 2009
Commentary

Business demography statistics

Business demography statistics provide an annual snapshot (as at February) of the structure and characteristics of New Zealand businesses. The series covers economically significant enterprises that are engaged in the production of goods and services in New Zealand.

This publication is the second release of business demography statistics on the basis of the 2006 version of the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006. Previously, the 1996 version of ANZSIC was used. For more details, see Introducing ANZSIC 2006. All figures in this Hot Off the Press are based on the 2006 version of ANZSIC. The tables released with this publication include both the 1996 and 2006 versions of ANZSIC. This dual publication of the two versions of ANZSIC will be repeated for the 2010 release of business demography statistics, while the 2011 release will be based only on ANZSIC 2006. The ANZSIC 2006 classification has been back cast to 2000 to provide users with a consistent time series.  

This is the third year of publication of an improved set of business demography statistics based on the Longitudinal Business Frame (LBF). This release includes both the structural (counts of businesses by industry, size, region, etc) and the dynamic (births, deaths, survival rates, etc) business demography statistics. The data is released on a provisional basis and includes a revised time series back to 2000. It is expected that the largest revisions will occur in the most recent reference periods. This is mainly due to the lags associated with the processing of administrative data. Analysis of the 2009 data should be carried out with caution. 

Total number of enterprises, geographic units, and employees

At February 2009, the total number of enterprises in New Zealand was 476,560, an increase of 0.3 percent (up 1,660) from 2008.  The number of business locations (geographic units) corresponding to these enterprises was 512,580, an increase of 0.3 percent (up 1,550) from 2008.

These enterprises engaged a total of 1.919 million paid employees (a business size measure statistic, not an official employment statistic). The number of paid employees engaged decreased by 53,000 (2.7 percent) in February 2009 compared with February 2008. Continuing enterprises contributed most of this decrease.

Graph, Number of Enterprises. Graph, Employee Count.

 

Industry statistics

Rental, hiring, and real estate services

The rental, hiring, and real estate services industry had the largest number of enterprises (96,250), representing 20 percent of all enterprises in New Zealand, at February 2009. This industry had a very small increase in the number of enterprises (up 80 or 0.1 percent), between February 2008 and 2009. About 94 percent of  enterprises in this industry were non-employing enterprises. There were approximately 27,900 employees engaged in this industry at February 2009, compared with 30,100 at February 2008 (down 2,300 or 7.5 percent).

Agriculture, forestry, and fishing

There were 73,560 enterprises predominantly engaged in the agriculture, forestry, and fishing industry at February 2009, a decrease of 1,320 (1.8 percent) compared with February 2008. Most of this decrease (69 percent) was from non-employing enterprises. The agriculture, forestry, and fishing industry engaged approximately 109,700 employees at February 2009, down 400 (0.4 percent) from the previous year. 

Construction

There were 53,130 enterprises predominantly engaged in the construction industry at February 2009, a decrease of 860 (1.6 percent) compared with February 2008. The number of enterprises decreased in all employment size groups except for the zero-paid employee category. 

The construction industry engaged approximately 121,900 employees at February 2009, down 9,700 (7.4 percent) from the previous year. This employment decrease was contributed largely by construction services (60 percent), while residential and non-residential building construction accounted for 35 percent of this decrease.

Professional, scientific, and technical services

There were 49,780 enterprises predominantly engaged in the professional, scientific, and technical services industry at February 2009, an increase of 1,200 (2.5 percent) compared with February 2008. About 92 percent of this increase was from non-employing enterprises. 

The professional, scientific, and technical services industry engaged approximately 126,200 employees at February 2009, down 700 (0.5 percent) from the previous year. 

Financial and insurance services

There were 28,400 enterprises predominantly engaged in the financial and insurance services industry at February 2009, an increase of 1,340 (4.9 percent) compared with February 2008. Almost all this increase was from non-employing enterprises.

The financial and insurance services industry engaged approximately 55,100 employees at February 2009, which was a decrease of 1,500 (2.6 percent) from 2008.

Manufacturing

There were 21,860 enterprises predominantly engaged in the manufacturing industry at February 2009, a decrease of  310 (1.4 percent) compared with February 2008. Of the total number of enterprises, 17 percent were involved in machinery and equipment manufacturing, while 15 percent were involved in fabricated metal product manufacturing.

The manufacturing industry was the largest employer at February 2009, with approximately 239,500 employees. Between 2008 and 2009, the number of employees in the manufacturing industry decreased by 14,400 (5.7 percent). Almost all manufacturing industries at the ANZSIC subdivision level recorded a decrease in employment. The main contributor to this decrease was wood product manufacturing, followed by textile, leather, clothing, and footwear manufacturing.

Regional statistics

In most regions of New Zealand, the number of business locations (geographic units) recorded little change between February 2008 and February 2009, with increases or decreases remaining within 1.0 percent. 

Auckland region

At February 2009, the Auckland region had nearly one-third (31 percent) of all business locations  in New Zealand. One-third (32 percent) of all paid employees were engaged by these business locations.

There were 161,100 business locations in the Auckland region at February 2009, up 0.5 percent from February 2008. At the ANZSIC division level, 12 out of 19 industry divisions recorded increases. The industry with the largest increase was financial and insurance services (up 490 or 3.9 percent), followed by professional, scientific, and technical services (up 425 or 1.9 percent) and health care and social assistance (up 300 or 4.9 percent). The construction industry had the biggest drop in the number of business locations (down 490 or 2.8 percent).

At February 2009, the business locations in the Auckland region had 621,400 employees, down 3.6 percent from February 2008. The industries with the largest decreases in employee numbers were administrative and support services (down 5,200 or 13.5 percent), manufacturing (down 5,100 or 6.3 percent), and retail trade (down 4,800 or 7.3 percent). Only five industry divisions out of 19 had higher employee numbers at February 2009 compared with February 2008. 

 Graph, Number of Business Locations by Broad Region.   Graph, Employee Count by Broad Region.
 

Remainder of North Island

Excluding the Auckland region, there were 223,200 business locations in the remaining regions of the North Island at February 2009. This represented a marginal drop of 0.1 percent when compared with February 2008. These business locations engaged approximately 810,500 employees at February 2009, a 2.6 percent decrease from February 2008.

Only two regions in the remainder of the North Island showed any increase in the number of business locations. These were Wellington (up 370 or 0.7 percent) and Taranaki (up 110 or 0.8 percent). In the Wellington region, the administrative and support services industry saw the steepest drop in employment (down 1,630 or 11.5 percent), followed by manufacturing (down 1,280 or 8.0 percent).

South Island

There were 128,060 business locations in the South Island at February 2009. This was an increase of 1,070 (0.8 percent) from February 2008. These business locations engaged approximately 487,100 employees, a decrease of 7,900 (1.6 percent) when compared with February 2008.

At February 2009, just over half of all business locations (51 percent) in the South Island were located in the Canterbury region. These business locations accounted for 53 percent of all employees engaged in the South Island. Between February 2008 and February 2009, Canterbury region recorded a marginal increase of 350 (0.5 percent) business locations but the number of employees dropped by 5,300 (2.0 percent).

Going against the overall trend of declining employee numbers were the Marlborough region with an increase of 780 employees (3.4 percent) from February 2008 and the West Coast region with an increase of 390 employees (2.6 percent) during the same period. In the Marlborough region, the agriculture, forestry, and fishing industry recorded the highest increase in the number of employees (up 1,100 or 24.0 percent). The industry with the largest increase in employee numbers in the West Coast region was mining (up 320 or 37.0 percent).

Business size

At February 2009, most enterprises in New Zealand (97 percent) had fewer than 20 employees. However, these enterprises accounted for only 31 percent of all employees. Conversely, enterprises with 100 or more employees made up 0.4 percent of the total number of enterprises in New Zealand but employed 47 percent of the total number of employees.

At February 2009, 69 percent (327,800) of all enterprises were non-employing enterprises. In terms of industrial activity, 28 percent of these enterprises were predominantly involved in rental, hiring, and real estate services, 16 percent in agriculture, forestry, and fishing, and 11 percent in professional, scientific, and technical services. During the year to February 2009, the largest decrease in employment came from businesses with 20–49 employees (down 14,800 employees or 5.5 percent), followed by enterprises with 100 or more employees (down 13,700 employees or 1.5 percent).

Note that the employee count statistics presented here do not include working owners unless they are paid a salary or a wage subject to pay as you earn tax (PAYE). 

 Graph, Total Enterprises and Total Employees.

 

Births and deaths of enterprises

Births and deaths of enterprises are presented on an annual basis, as at February. For a birth or death to be counted in a reference period, it must have occurred during the year (start of March to the end of February), and not have a changed status by the February reference point. For example, an enterprise which ceased operation during the year, and then recommenced operation before February, will not be counted as a death. In the graphs for births and deaths, the term 'February' (eg February 2009) is used to describe this annual reference period for measuring births and deaths.

The data is released on a provisional basis and includes a revised time series back to 2001. It is expected that the largest revisions will occur in the most recent reference periods. This is mainly due to the lags associated with the processing of administrative data. Analysis of the 2009 data should be carried out with caution.

In the February 2009 reference period, 51,800 new enterprises started operation (births), which is a decrease of 14.9 percent compared with February 2008. These new enterprises accounted for 11 percent of the total number of enterprises (476,560) in New Zealand at February 2009. Over the period 2001 to 2009, the number of enterprise births each year has varied from 42,880 to 69,800.  Note that the 2004 figure of 69,800 was influenced by a methodology change and needs to be interpreted with caution (see 'Technical notes').

In the February 2009 reference period, 52,880 enterprises ceased operation (deaths), which is an increase of 2.9 percent compared to February 2008. The number of enterprise deaths has varied from 38,010 to 52,880 over the period 2001 to 2009, the highest being in 2009.

The February 2009 reference period is the first year since 2001 where the provisional data shows the number of deaths exceeds the number of births. There was a small overall increase of 0.3 percent in the total number of enterprises in New Zealand from February 2008 to February 2009. This was because the enterprise births statistics do not include businesses that were temporarily ceased in February 2008, but were operating in February 2009.

 Graph, Births and Deaths.

 

The number of births each year can be expressed as a birth rate (percentage) by dividing the number of births by the total population of enterprises. Over the period 2001 to 2009, the annual birth rate of new businesses varied between 11 and 17 percent. Note that the high value in 2004 (17 percent) coincides with a change in methodology (see 'Technical notes'). The annual death rate varied between 10 and 12 percent. The resulting business turnover rate (sum of the birth rate and death rate) ranged from 22 percent to 26 percent.

Graph, Birth and Death Rate.   

Breakdown of births and deaths

Births can be analysed further and classified as:

  • surviving births (births that survive at least one reference period in the business demography population)
  • short-lived births (births that do not survive one reference period in the business demography population, either due to death or dormancy)
  • pure births (births that have a recent birth date –  the birth dates of all geographic units and the enterprise are less than two years from the February reference period).

Analysis of births over the periods 2001 to 2008 suggests around four in five births survive at least one reference period (surviving births). Of the 60,880 births in the February 2008 reference period, 50,020 survived until February 2009, representing 82 percent of total births.  

Births by industry

In the February 2009 reference period, the rental, hiring, and real estate services industry had the largest number of births (23 percent of total births), followed by professional, scientific, and technical services (15 percent) and construction (11 percent). From 2001 to 2009 the rental, hiring, and real estate industry has had the highest number of births in each year.

In the February 2009 reference period, the mining industry had the lowest number of births, followed by electricity, gas, water, and waste services, and then public administration and safety. These three industries consistently had the lowest number of births over the period 2001 to 2009. 

 Graph, Births by Industry.

Deaths by industry  

In the February 2009 reference period, the rental, hiring, and real estate services industry had the largest number of deaths (25 percent of total deaths), followed by construction (13 percent), professional, scientific, and technical services (13 percent). Industries with the smallest number of deaths included mining; public administration and safety; and electricity, gas, water, and waste services.

 Graph, Deaths by Industry.

Births by employee size group

In the February 2009 reference period, the majority of births were non-employing enterprises (88 percent). Ten percent of the births were in the 1 to 5 employees category. All other employee size categories had small numbers of births. This was a consistent trend over the period 2001 to 2009. In total, the new enterprises for 2009 had 22,400 employees, which is approximately 1.2 percent of the total number of paid employees for all enterprises.

Deaths by employee size group

In the February 2009 reference period, the majority of enterprise deaths were non- employing enterprises (92 percent). A further seven percent were in the 1 to 5 employees category. In total the ceased enterprises had 20,800 paid employees (approximately 1.1 percent of the total number of paid employees).

Graph, Births by Employee Size Group. Graph, Deaths by Employee Size Group.

Surviving births  

The longitudinal nature of the LBF (the source data for business demography statistics) allows enterprise births in any reference period to be tracked over subsequent years. Survival rate statistics can be used to analyse the rate of survival of new births, by both industry and business size. Survival rates are calculated as the percentage of births in each reference period that survive into future reference periods in the business demography population (surviving births divided by total births for a particular reference period). To be considered a survivor the enterprise must exist at every reference period between its birth year and the given reference period.

Survival rates of enterprises birthed in 2001

This analysis concentrates on enterprises birthed in 2001. Similar trends are observed for enterprises birthed from 2002 to 2007.

In the February 2001 reference period there were 42,880 enterprise births. Of these, 80 percent survived the first year, 67 percent survived the second, 58 percent survived the third, 50 percent survived the fourth, 45 percent survived the fifth, 40 percent survived the sixth, 37 percent survived the seventh, and 34 percent survived the eighth (2009).

Non-employing enterprises had a significantly lower proportion (31 percent) of births surviving the eight years to 2009 compared with businesses that had paid employees (49 percent for the 1 to 5 employees category and higher proportions for larger employee size groups).  

 Graph, Survival Rate of 2001 Births by Employee Size Group.

Industries with higher survival rates over the eight-year period included mining (53 percent), health care and social assistance (50 percent), financial and insurance services (43 percent), and agriculture, forestry, and fishing (43 percent). Lower survival rates were observed for the administrative and support services industry and the information media and telecommunications industry (26 percent for both).

For technical information contact:
Geoff Mead, Auckland 09 920 9100
or Upul Paranawithana, Auckland 09 920 9100
Email: info@stats.govt.nz

Next release ...

New Zealand Business Demography Statistics: At February 2010 will be released in October 2010.

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