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THE building boom is a bonanza for small businesses, which are growing almost 5 per cent a year faster than the rest of the economy.
But most small companies are having trouble finding enough skilled staff.
The economy as a whole grew 3.6 per cent in the March year, but a National Bank survey, out last week, shows small business activity was up 4.7 per cent.
Small businesses employ up to 20 staff. The survey polled about 600 businesses around New Zealand, but excluded farms.
A recent Treasury research report shows that 96 per cent of firms employ fewer than 20 people, but account for about only 30 per cent of the total workforce.
The biggest problem for small businesses is a lack of skilled workers, with unemployment at just 4.3 percent in March - a 16-year low.
New Zealand already has a high labour participation rate, with almost 67 per cent of the working age population in a job, and a rising number of women entering the workforce.
Kiwis are also working longer hours than they used to.
Organisation for Economic Co-operation and Development (OECD) figures show that New Zealanders' working hours. have increased 18 per cent since 1970 second only to Americans.
But the lack of skilled workers remains a big concern for small business.
Net migration was about 24,000 in the year to May, down from 42,500 people in the previous May year.
Net migration was expected to be about 10,000 this year, National Bank said, with Macquarie Research economists even forecasting the monthly net figure to turn negative by the end of the year. The main boost to small businesses came from strength in the construction sector and a spill-over into shop sales and related services.
Building new homes tends to increase sales of items such as fridges, stoves, carpets and furniture.
The small business sector's reliance on the construction sector for growth meant there was a risk that sector could "underperform" the rest of the economy in 2005, National Bank said.
But a small business contraction was not expected. The general economy may grow about 3 per cent, with small business slightly less than that. The building sector is expected to slow as housing demand slackens.