Xero, the global small business platform, released its Xero Small Business Insights (XSBI) for Aotearoa New Zealand revealing that although the small business sector continues to struggle, there are still certain positive signals of improvement. For the first time in 2.5 years, overall sales actually increased for the quarter, though at 1.9% y/y this is still “a decline in inflation-adjusted (real) terms.”
Bridget Snelling, Country Manager – Aotearoa New Zealand at Xero said while these results are behind the long-term “national sales growth average of 6.2% y/y, there is reason for hope beyond what has been a difficult trading environment.”
Snelling added that the last four months have shown “positive sales growth, the longest consecutive run since mid-2023.” After the Reserve Bank of New Zealand’s interest rate cuts, the XSBI data suggests “extra spending is gradually flowing through to small businesses.”
Somewhat modest quarterly sales growth was seen in Auckland and Wellington, bucking a “trend of recent underperformance by finally recording sales increases at +0.6% y/y and +0.4% y/y respectively.”
Canterbury (+4.3% y/y) and Otago (+6.3% y/y) continued “to be the two best performing regions for sales.”
Jobs in small businesses were “1.2% lower than a year ago in the September quarter, after a similar fall in the June quarter.”
Snelling said that the divergence of jobs and sales results is “likely due to the lagged nature of employment. They noted that businesses will want to see more sustained levels of sales growth “before building back confidence to increase their workforce.”
Regionally, Canterbury was the only location to have “positive jobs growth in the September quarter, reflecting its strength in sales growth.”
The stand-out industry performer of late has been “agriculture, recording double digit growth for three consecutive quarters.” But this didn’t continue in the September quarter, with sales “growing only 3.3% y/y, down from 11.1% y/y in the June quarter.”
Snelling also stated that while still growing, it’s a concern to see agriculture sales slow as it has “been one of the few bright spots in the New Zealand economy this year.” They added that the solid sales performance earlier in the year has supported jobs which “were up 0.8% year-on-year, one of only three industries XSBI tracks to record positive jobs growth in the September quarter.”
Snelling also shared that the best performers for 2025 have “been the manufacturing (+2.9% y/y sales and +0.6% y/y jobs) and professional services (+2.4% sales and +1.8% y/y jobs) industries, having recorded at least three consecutive quarters of positive sales and jobs growth, something that has eluded other industries.”
And industries such as construction, hospitality and retail continued to be challenged, recording sales growth “results of -0.7%, 1% and 2.9% y/y respectively.”
Meanwhile, construction was said to be quite weak, with “jobs lower than a year ago for seven consecutive quarters.” The September quarter “showed jobs down 3.9% y/y.” This was matched by a weak jobs “result in hospitality (-3.9% y/y) and retail also saw negative jobs growth at -1.2% y/y.”
With Stats NZ data indicating these three segments as the biggest employers of younger individuals, Snelling said the XSBI results seemingly “affirm that conditions remain tough in the job market, particularly for youth, with fewer opportunities out there.”
Although they might not be out of the woods just yet, there are “some hopeful signs on the horizon and the Christmas period will be telling.” They have now concluded that one way they can all bring some community spirit is by “making an effort to shop local and support small businesses this festive season.”