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• Structure and Dynamics - 2002
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• Structure and Dynamics - 2000
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Statistics New Zealand introduced a new practice that changed the method used to birth units onto the Business Frame

In June 2000, Statistics New Zealand introduced a new practice that changed the method used to add or birth units onto the Business Frame. This change in practice appears to have had an effect on business demographic data. Although not possible to precisely measure the impact of change, it is reasonable to conclude that 2001 business demography data understates the change in the number of enterprises by approximately 15,000 units when compared with the 2000 business demographic data.⁹

This change in birthing practice means that data on births for 2001 is not comparable with previous data. Meaningful comparisons can still be made with data from previous years, for the other larger employment size categories. It is also still valid to use the 2001 Business Demographic data for cross sectional analysis that does not involve comparing 2001 data to previous years.

SMEs account for the majority of all births and deaths

Enterprise births and deaths are dominated by firms employing less than 5 FTEs, accounting for over 90 percent of total number of births to 2000 and deaths to 2001 as well as in previous years.

Given that new small businesses were the single greatest contributor to job creation over 1995 to 1997, a high rate of enterprise births amongst small firms should be encouraged. In addition, a high number of deaths is not in itself cause for concern as long as deaths of economically viable firms are minimised.

Figure 11: Enterprise Births 2000

Figure 12: Enterprise Deaths 2001

Enterprise births outnumbered deaths again in 2000

For the first time in the last decade the number of enterprise deaths outnumbered the number of enterprise births in 1999 on the back of an economic downturn both domestically and throughout the Asian region. This was common across firm sizes with all categories recording a net death rate. Despite this unusual phenomenon, the trend returned and the number of enterprise births overtook the number of enterprise deaths in 2000.

Figure 13: Enterprise Births and Deaths 1995-2000/2001

⁹Statistics New Zealand attempted to estimate the effect of the birthing rule that was used in 2001 on the 2000 data. This indicates that there would have been fewer units in 2000 had the new birth technique been introduced then. Statistics New Zealand is continuing this work on the 2002 data to attempt to produce a longer more consistent time series.