Xero, the global small business platform, today released its latest Small Business Insights (XSBI) update, revealing that small businesses are showing continued resilience despite “a recent slowdown in sales growth and elevated global and economic uncertainty.”
October 2024 – June 2025 at a glance:
- Sales growth averaged +3.0% y/y in the June quarter, down from +5.3% y/y in the March quarter and +4.5% y/y in the December 2024 quarter.
- Western Australia recorded the strongest sales (+4.6% y/y) in the June quarter, while the Australian Capital Territory (+1.0% y/y) recorded the weakest.
- Public administration was the best performing industry (7.9% y/y) in the June quarter, whereas education and training (-1.2% y/y) had the softest sales performance
Following average sales growth of “4-5% year-on-year (y/y) in the second half of 2024 and in the first quarter of 2025, small business sales experienced a slowdown in the June 2025 quarter, growing 3.0% y/y.”
This result is the smallest quarterly growth “in sales since 2020, and below the long-term average of this series (7.8% y/y).”
Despite the slowdown in sales, Australian small businesses continue to lead other markets tracked in this series, “including New Zealand (-0.1% y/y) and the United Kingdom (+2.3% y/y), demonstrating their ongoing resilience despite challenging macroeconomic conditions.”
Looking at sales throughout 2025, performance “was volatile month-to-month.”
After a strong start to the year in January (+7.4% y/y), momentum “slowed in February (+2.1% y/y), but experienced a sharp jump in March (+6.3% y/y). Sales were much softer in April and May (+1.6% y/y), before rising again (+5.9% y/y) in June.”
The strong rebound in March and June, the months “immediately following The Reserve Bank of Australia’s (RBA) decision to cut the official interest rate, suggests consumer confidence improved and had a short-term positive impact on spending in these months.”
Louise Southall, Xero Economist:
“Despite slower growth than in previous quarters, it’s encouraging to see Australian small business sales continuing to rise. Yet, with growth still below the long-term average, it’s clear many businesses are operating in a challenging environment.”
They added:
“Easing inflation may pave the way for further rate cuts, which could help lift consumer spending and ease the pressure of loan repayments for small business owners. However, uncertainty remains, particularly as global trade tensions, including US tariffs and their flow-on effects in China, continue to pose potential risks.”
All states and territories recorded a slowdown in “sales growth in the June quarter compared to the two previous quarters.”
Western Australia remained the “strongest performer, with sales growing +4.6% y/y.”
However, this was a marked slowdown “from the March and December quarters, where sales grew +7.5% y/y and +7.4% y/y respectively, suggesting even the strongest performing states are feeling the effects of current economic uncertainty.”
While Queensland (+4.2% y/y) and South Australia (+3.4% y/y) also recorded strong results in the June quarter, Victoria “experienced cooling sales performance (+1.8% y/y).”
Sales growth in Tasmania (+1.4% y/y) and the Australian Capital Territory (+1.0% y/y) was also “modest, well below the national average of +3.0% y/y.”
At an industry level, small businesses in the public administration sector experienced “strong sales, recording +7.9% y/y growth in the June quarter following double digit growth in the previous two quarters.”
Health care and social assistance was also “particularly resilient, averaging +7-8% y/y for the past three quarters.”
The continued strength within these industries is likely “tied to ongoing government investment, particularly due to increased demand for services like the National Disability Insurance Scheme (NDIS) and aged care.”
In contrast, education (-1.2% y/y) recorded a fall in sales “in the June quarter, likely due to the ongoing decline in international students attending tertiary education in Australia.”
Hospitality sales were also “soft (+1.5% y/y) compared to the average +2.0% y/y growth seen in the two previous quarters, suggesting ongoing caution around discretionary spending.”
Agriculture (+1.9% y/y), manufacturing (+2.1% y/y), and transport (+2.2% y/y), industries typically “exposed to global supply‑chain disruptions and trade volatility, all recorded sales growth below the national average.”
Angad Soin, Managing Director ANZ & Global Chief Strategy Officer, Xero said:
“Following months of economic uncertainty, it’s reassuring to see the underlying resilience of our small business sector. However, as most small business owners know, it’s important to consistently stay on top of cash flow and be ready to adapt to changing customer behavior.”