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New Zealand Business Demography Statistics: At February 2010
Embargoed until 10:45am  –  29 October 2010
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 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 statistics are released on a provisional basis and include 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 2010 data should be carried out with caution. 

This publication is the third 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 is the last dual publication of the two versions of ANZSIC. 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.  

Total number of enterprises, geographic units, and employees

At February 2010, the total number of enterprises in New Zealand was 470,350, a decrease of 1.7 percent (down 8,220) from 2009.  The number of business locations (geographic units) associated with these enterprises was 505,680, a decrease of 1.7 percent (down 8,840) from 2009.

These enterprises engaged a total of 1.890 million paid employees (a business size measure statistic, not an official employment statistic). The number of paid employees decreased by 37,000 (1.9 percent) at February 2010 compared with February 2009.

Graph, Number of enterprises. Graph, Employee count.


Industry statistics

Rental, hiring, and real estate services

Rental, hiring, and real estate services continued to be the industry with the largest number of enterprises (95,820 at February 2010), representing about 20 percent of all enterprises in New Zealand. Between February 2009 and 2010, this industry recorded a small decrease in the number of enterprises (down 810 or 0.8 percent) which was the first decrease in the number of enterprises recorded for this industry since the beginning of the current series at February 2000.

There were approximately 26,700 employees engaged in this industry at February 2010, compared with 27,100 at February 2009 (down 400 or 1.5 percent). A large majority of enterprises in this industry (95 percent at February 2010) were non-employing businesses.

Agriculture, forestry, and fishing

There were 72,400 enterprises in the agriculture, forestry, and fishing industry at February 2010, a decrease of 1,640 (2.2 percent) compared with February 2009. The enterprises in this industry engaged approximately 107,400 employees at February 2010, down 3,100 (2.8 percent) from the previous year. This was also the lowest number of employees on record since February 2003 for this industry. At the industry class level, other agriculture and fishing support services had a drop of 1,900 employees (10.8 percent) and made the largest contribution towards the overall drop in employment numbers in this industry. The employment in the other agriculture and fishing support services is influenced by the timing of seasonal agricultural activities such as crop harvesting. 

Construction

There were 50,400 enterprises in the construction industry at February 2010, a decrease of 2,800 (5.3 percent) compared with February 2009. This was the largest drop in the number of enterprises across all industries, over the past year.

This industry engaged approximately 115,100 employees at February 2010, down 7,700 (6.3 percent) from the previous year. The industry subdivision building construction which included both residential and non-residential building construction saw a drop of approximately 2,800 employees or 9.9 percent over the past year.

Manufacturing

There were 21,190 enterprises in the manufacturing industry at February 2010, a decrease of 640 (2.9 percent) compared with February 2009. This industry has now seen the number of enterprises declining consecutively for the past four years.

While continuing to be the industry employing the largest number of paid employees (227,300 at February 2010), manufacturing recorded a drop of 12,300 employees (5.2 percent) between 2009 and 2010. This decline in the number of employees came from all subdivisions of the manufacturing industry, with significant contributions coming from machinery and equipment manufacturing (down 2,100 or 7.3 percent), fabricated metal product manufacturing (down 2,000 or 8.8 percent), and textile, leather, clothing, and footwear manufacturing (down 1,400 or 10.6 percent).

Retail trade

Retail trade, the third largest industry in terms of the number of employees engaged, with 196,500 paid employees at February 2010, had 4,900 (2.4 percent) fewer employees than at February 2009. During the same period, the number of enterprises predominantly engaged in this industry also dropped, but by a relatively smaller margin of 1.5 percent.

Health care and social assistance

Between February 2009 and February 2010, the number of enterprises predominantly engaged in the health care and social assistance industry remained steady (up by just 80 or 0.5 percent). During the previous five years, the annual increase in the number of enterprises in this industry ranged between 3.2 and 4.7 percent.

The number of paid employees in this industry at February 2010 was 206,400, which was an increase of 5,600 or 2.8 percent compared with February 2009. The main contributors towards this increase were hospitals (up 1,500 or 2.1 percent) and aged care residential services (up 1,400 or 4.5 percent).

Regional statistics

In all regions of New Zealand, the number of business locations (geographic units) decreased between February 2009 and February 2010.The number of employees engaged in these business locations decreased in all regions except Gisborne which showed a marginal increase.

Auckland Council region

The new Auckland Council region that comes into existence on 1 November 2010 had an estimated 31 percent of the business locations and 32 percent of the paid employees in New Zealand. The Auckland Council region had 48 percent of the business locations in the information media, and telecommunications industry in New Zealand, but only 6 percent of the agriculture, forestry, and fishing business locations in New Zealand.


 Number of business locations in Auckland Council region and New Zealand.

The Table Builder tables include regional statistics on the basis of the local government boundaries that applied from 1 November 2010 as well as those that applied at February 2010. Both sets of statistics use the business demography data as at February 2010.

The following analysis is based on local government boundaries as at February 2010:

Auckland region

At February 2010, Auckland had nearly one-third (31 percent) of all business locations in New Zealand. Nearly one-third (32 percent) of all paid employees were engaged by these business locations.

There were 158,750 business locations in Auckland at February 2010, down 1.8 percent from February 2009. At the ANZSIC division level, 16 out of 19 industry divisions recorded decreases. The industry with the largest decrease was construction (down 960 or 5.6 percent), followed by professional, scientific, and technical services (down 690 or 3.0 percent) and transport, postal, and warehousing (down 270 or 4.7 percent). The information media and telecommunications industry had a small increase in the number of business locations (up 90 or 3.7 percent). 

At February 2010, the business locations in Auckland had 611,500 employees, down 2.0 percent from February 2009. The industries with the largest decreases in employees were manufacturing (down 4,000 or 5.2 percent), professional, scientific, and technical services (down 2,300 or 3.6 percent), and construction (down 1,800 or 5.1 percent). Only three industry divisions out of 19 had higher employee numbers at February 2010 compared with February 2009. The industry with the largest increase was health care and social assistance (up 2,600 or 4.5 percent), followed by education and training (up 2,300 or 4.4 percent). 

 Graph, Number of business locations by broad region.  Graph, Employee count by broad region.
 

Remainder of North Island

Excluding Auckland, there were 220,000 business locations in the remaining regions of the North Island at February 2010. This represented a drop of 1.9 percent compared with February 2009. These business locations engaged approximately 799,900 employees at February 2010, a 1.6 percent decrease from February 2009.

The regions with the largest decreases in business locations were Waikato (down 1,140 or 2.2 percent) and Wellington (down 880 or 1.7 percent). In the Waikato region the largest drop in employment was in the construction industry (down 1,000 or 8.3 percent), followed by accommodation and food services (down 800 or 6.9 percent).   

South Island

There were 126,750 business locations in the South Island at February 2010. This was a decrease of 1,790 (1.4 percent) from February 2009. These business locations engaged approximately 478,200 employees, a decrease of 11,300 (2.3 percent) compared with February 2009.  

At February 2010, just over half of all business locations (51 percent) in the South Island were located in Canterbury. These business locations accounted for 53 percent of all employees engaged in the South Island. Between February 2009 and February 2010, in the South Island, Canterbury recorded the largest decrease of 740 (1.1 percent) business locations and the number of employees dropped by 5,400 (2.1 percent). The industries with the largest decrease in employees in the Canterbury region were manufacturing (down 2,600 or 7.0 percent), followed by construction (down 1,000 or 6.3 percent).

Business size

At February 2010, most enterprises in New Zealand (97 percent) were either non-employing or had fewer than 20 employees. However, these enterprises with fewer than 20 employees accounted for only 31 percent of all employees. Conversely, enterprises with 100 or more employees made up less than one percent of the total number of enterprises in New Zealand but employed 47 percent of the total number of employees.  At February 2010, 69 percent (323,940) 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, 10 percent in professional, scientific, and technical services and 10 percent in construction.

During the year to February 2010, the enterprises with 6–9 employees recorded the largest drop of employees (down 2.8 percent), followed by enterprises with 20–49 employees (down 2.3 percent) and enterprises with 100 or more employees (down 2.3 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 2010) 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 2010 data should be carried out with caution.

In the February 2010 reference period, 43,700 new enterprises started operation (births), which is a decrease of 20.4 percent compared with February 2009. This is the largest decrease in any year since the beginning of the new series. These new enterprises accounted for 9 percent of the total number of enterprises (470,350) in New Zealand at February 2010. This is the lowest birth rate since the beginning of the current series. Over the period 2001 to 2010, the number of enterprise births each year has varied from 43,020 to 69,560. Note that the 2004 figure of 69,560 was influenced by a methodology change and needs to be interpreted with caution (see 'Technical notes').

In the February 2010 reference period, 55,040 enterprises ceased operation (deaths), which is an increase of 6.0 percent compared to February 2009. The number of enterprise deaths has varied from 38,100 to 55,040 over the period 2001 to 2010, the highest being in 2010.

The February 2010 reference period was the first year since 2001 where the provisional data showed the number of deaths exceeding the number of births. There was an overall decrease of 1.7 percent in the total number of enterprises in New Zealand from February 2009 to February 2010. 


 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 2010, the annual birth rate of new businesses varied between 9 and 17 percent. Note that the high value in 2004 (17 percent) coincided 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 21 percent to 26 percent.

Graph, Birth and death rate for enterprise.  

Breakdown of enterprise 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 2009 suggests around four in five births survive at least one reference period (surviving births). Of the 54,930 births in the February 2009 reference period, 44,600 survived until February 2010, representing 81 percent of total births.

Enterprise births by industry

In the February 2010 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 (14 percent) and construction (10 percent). From 2001 to 2010 the rental, hiring, and real estate industry has had the highest number of births in each year.

In the February 2010 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 2010. 


 Graph, Births by industry.

Enterprise deaths by industry  

In the February 2010 reference period, the rental, hiring, and real estate services industry had the largest number of deaths (22 percent of total deaths), followed by construction (14 percent) and professional, scientific, and technical services (14 percent). Industries with the smallest number of deaths included mining; electricity, gas, water, and waste services; and public administration and safety.

 

 Graph, Deaths by industry.

Enterprise births by employee size group

In the February 2010 reference period, the majority of births were non-employing enterprises (87 percent). Eleven 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 2010. In total, the new enterprises for 2010 had 20,800 employees, which is approximately 1.1 percent of the total number of paid employees for all enterprises.

Enterprise deaths by employee size group

In the February 2010 reference period, the majority of enterprise deaths were non-employing enterprises (93 percent). A further 6 percent were in the 1 to 5 employees category. In total the ceased enterprises had 23,600 paid employees (approximately 1.2 percent of the total number of paid employees).

 

Graph, Births by employee size group.  Deaths by employee size group.


Surviving births  

The longitudinal nature of the Longitudinal Business Frame (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 2008.

In the February 2001 reference period there were 43,020 enterprise births. Of these, 80 percent survived the first year, 67 percent survived the second, 58 percent survived the third, 51 percent survived the fourth, 45 percent survived the fifth, 40 percent survived the sixth, 37 percent survived the seventh, 34 percent survived the eighth and 31 percent survived the ninth (2010).

Non-employing enterprises had a significantly lower proportion (28 percent) of births surviving the nine years to 2010 compared with businesses that had paid employees (46 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 nine-year period included mining (47 percent); health care and social assistance (47 percent); agriculture, forestry, and fishing (40 percent); and financial and insurance services (39 percent). Lower survival rates were observed for the administrative and support services industry (23 percent) and the information media and telecommunications industry (24 percent).

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 2011 will be released in October 2011.

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