Xero has released its first-ever data-based measurement of small business productivity, using anonymised data from Xero Small Business Insights (XSBI) to calculate the dollar value produced per hour worked by a typical small business employee.
The numbers paint a static picture. In the March quarter, small business labour productivity averaged $74.00 per hour, down from $75.30 in the December quarter and below the long-term average of $76.30. Productivity per employee told a similar story, averaging $9,168.90, also below the long-run average of $9,137.00 and down on the previous quarter.
Xero New Zealand country manager Bridget Snelling says the lack of meaningful improvement, rather than any sharp decline, is the real concern.
“It’s disappointing we’re not seeing the kind of improvement needed to lift the small business economy,” Snelling says.
International comparisons make the picture starker. New Zealand has consistently trailed both Australia and the UK on small business productivity, regardless of how those two countries have performed against each other.
“Falling behind international peers like Australia and the UK is a reminder that lifting productivity needs to be a long-term priority,” Snelling says.
“The encouraging part is that there are clear levers, from digital adoption to skills and process improvements, that can help close that gap over time. Our small businesses can’t afford to sit still, this needs to be a priority.”
Industry performance varied widely. Manufacturing, construction and real estate services ranked among the most productive sectors, while hospitality sat consistently at the bottom. Retail trade was the standout improver, with productivity up 9.1 percent year-on-year as retailers grew sales without adding hours worked.
Regionally, manufacturing-heavy Hawke’s Bay led the country, while tourism-dependent Otago lagged, though Otago also posted the strongest productivity growth of any region, up 7.4 percent year-on-year as tourism continues to recover.
Bridget Snelling, Xero’s Country Manager for Aotearoa New Zealand, says lifting small business productivity needs to be a long-term priority.
Confidence holds despite the numbers
The productivity data lands alongside Deloitte’s latest Asia Pacific CFO Pulse Survey, which found New Zealand CFOs deeply pessimistic about the broader economy but unexpectedly confident in their own organisations. Net sentiment on the global economy sat at -62 percent, more than twice as negative as the rest of Asia Pacific, yet 52 percent of CFOs remained optimistic about their own company’s performance over the next 12 months, with 55 percent expecting revenue growth.
Andrew Boivin, Deloitte New Zealand’s CFO Programme Leader, says that gap between gloom about the wider economy and confidence closer to home isn’t a contradiction, it reflects where finance leaders feel they have control.
“While our CFOs are looking at the global and domestic economies with real caution, they’re still prioritising growth, and not backing down on operational efficiency and investment in technology to drive performance,” Boivin says.
Read alongside Xero’s data, that focus on “controllable” growth raises a pointed question: Are New Zealand businesses, large and small, leaning on the right levers?
Deloitte’s survey found just 23 percent of NZ CFOs name technology or AI as a key growth driver, well behind the 30 percent recorded across Asia Pacific, and AI adoption, while widespread, remains shallow, with only 13 percent of organisations reporting extensive deployment.
For Boivin, the task ahead is about turning that cautious confidence into sustained execution.
“As economic and geopolitical uncertainty persists, finance leaders are focusing on what they can control, driving efficiency, strengthening resilience, and investing selectively in growth and technology to position their organisations for the future,” he says.
“The challenge for New Zealand businesses will be navigating ongoing uncertainty while positioning for long-term growth.”
Snelling agrees the tools to close the gap already exist — the harder part is using them.
“There are clear opportunities here,” she says. “Businesses that invest in the right processes, skills and digital tools are better placed to free up time, focus on customers, and drive growth.”
