Small business quarterly sales growth at slowest pace since Covid: Xero
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The news: Sales growth among small businesses in the June quarter slowed to its lowest rate since 2020, according to data collected by accounting software provider Xero.
The numbers: In the June quarter, small businesses in Australia saw sales growth of 3% year on year, which is the slowest quarterly growth since 2020.
However, this is better than small businesses in the UK and New Zealand which saw year-on-year growth of 2.3% and -0.1%.
The long-term average growth rate for small businesses in Australia is 7.8% year on year. The March quarter 2025 rate of 5.3% and December quarter 2024 rate of 4.5% were also relatively slow.
All states and territories registered a slowdown in growth in the June quarter, compared to the two preceding quarters. Western Australia was the strongest performer, posting gains of 4.6% year on year, although this was a significant fall from 7.5% and 7.4% in the March and December quarters respectively.
In the June quarter, small businesses in industries benefiting from public spending saw high sales year-on-year growth. This included public administration (+7.9%) as well as health care and social assistance which both grew at 7 to 8% over the past three quarters.
Education (-1.2%) was the weakest sector in the June quarter amid declining international students attending tertiary education in Australia. Hospitality (+1.5%), agriculture (+1.9%), manufacturing (+2.1%) and transport (+2.2%) were also below the national average.
The context: Xero flagged that recent uncertainty has made planning difficult for small businesses and a slowdown in global economic growth, particularly China, due to US tariffs could impact Australian small businesses.
However, an interest rate cut by the RBA next month could help boost consumer spending and ease the pressure of loan repayments, the company said.
The source: Xero Small Business Insights Australia Update
