By RNZ

Small businesses managed to lift their sales and add jobs in March despite Omicron cases peaking across the country, according to a new Xero report.

The Xero Small Business Index, which is a broad measure of the performance of small firms, jumped 20 points over March to 134, well above the benchmark average of 100.

The strong monthly improvement was driven by a significant 2.4 day improvement in the time firms were waiting to get paid to 21.3 days.

Xero managing director for New Zealand Craig Hudson said while the reading was encouraging, it had to be treated with caution because it was influenced by the fact it aligned with the end of the country's financial year, which impacted how small businesses filed their results.

"We saw a similar result at the end of the previous financial year which was subsequently revised the following month."

Meanwhile, Hudson said the sales and jobs data for March pointed to the "remarkable" resilience of the small business community in the face of rising Omicron cases.

Sales activity was 3.7 per cent higher than the same month a year ago, after four months of double-digit increases. Job growth also eased over the month, falling from 4.1 per cent in February to 2.7 per cent.

"It is encouraging to see annual growth has remained positive despite the challenging conditions," he said.

Hospitality and agriculture sectors saw a decline in sales over March, reflecting the ongoing effects of Covid-19 disruptions.

Businesses in the construction, professional services, manufacturing and retail firms reported solid revenue growth of 6.2 per cent, 4.7 per cent, 4.4 per cent and 4.3 per cent respectively.

Hudson said it was important to see employees' wages increase by 4 per cent on a year ago, but the cost pressure would put a squeeze on business owner's margins.

However, wages were failing to keep up with the rising cost of living which was 6.9 per cent higher than a year ago.