New Zealand’s small business sector is showing its first glimmers of recovery in sales after a prolonged period of stagnation, according to the latest Xero Small Business Insights (XSBI) report for Aotearoa New Zealand.
For the first time in two-and-a-half years, small business sales rose over the quarter, with a year-on-year increase of 1.9 percent. While this marks a positive shift, the growth is still below the long-term national sales average of 6.2 percent and remains a decline in real, inflation-adjusted terms.
“The last four months have shown positive sales growth, the longest consecutive run since mid-2023. Following the Reserve Bank of New Zealand’s interest rate cuts, the XSBI data suggests extra spending is gradually flowing through to small businesses,” says Bridget Snelling, Country Manager New Zealand at Xero.
Regionally, Auckland and Wellington recorded modest quarterly sales growth of +0.6 percent and +0.4 percent respectively, reversing a trend of recent underperformance. Canterbury (+4.3 percent) and Otago (+6.3 percent) continued to lead the nation in sales growth.
However, the report highlights ongoing challenges in employment. Small business jobs were 1.2 percent lower than a year ago in the September quarter, following a similar decline in the June quarter.
Snelling notes the disconnect between sales and jobs. “Businesses will want to see more sustained levels of sales growth before building back confidence to increase their workforce.”
Canterbury was the only region to record positive jobs growth, reflecting its strong sales performance.
Industry performance has been mixed. Agriculture, which had recorded double-digit sales growth for three consecutive quarters, slowed to 3.3 percent YoY in the September quarter.
“Though 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. The solid sales performance earlier in the year has supported jobs which were up 0.8 percent year-on-year, one of only three industries XSBI tracks to record positive jobs growth in the September quarter.”
The report identifies manufacturing (+2.9 percent YoY sales and +0.6 percent YoY jobs) and professional services (+2.4 percent sales and +1.8 percent YoY jobs) as star performers for 2025, having achieved at least three consecutive quarters of positive growth in both sales and jobs.
In contrast, construction, hospitality, and retail continue to face headwinds. Construction sales fell 0.7 percent YoY, hospitality rose just 1 percent, and retail grew 2.9 percent YoY. Job numbers were down across these sectors; construction and hospitality both fell 3.9 percent YoY, while retail declined 1.2 percent YoY.
With these industries among the largest employers of young people, Snelling stresses the ongoing challenges for youth employment. “The XSBI results affirm that conditions remain tough in the job market, particularly for youth, with fewer opportunities out there.”
Looking ahead to the holiday season, Snelling encourages community support for small businesses.
“While we’re not out of the woods yet, there are some hopeful signs on the horizon and the Christmas period will be telling. One way we can all bring some community spirit is by making an effort to shop local and support small businesses this festive season.”
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