Xero data: Aussie small business sales stall as economic headwinds take hold

Melbourne, Australia — 29 October 2026 — New Xero Small Business Insights (XSBI) data shows Australian small business sales growth has stagnated with sales rising 5.2% year-on-year (y/y) in the September quarter – below the long-term average of 7.8%.

Drawing on anonymised and aggregate accounting data from around 520,000 Australian small businesses, XSBI shows jobs growth is holding up while wage growth has slowed, as businesses balance softer sales with elevated costs.

Xero Economist Louise Southall said the data reflects an economy still digesting the delayed effects of previous interest rate rises.

"The September quarter tells us small business conditions haven’t worsened, but they also haven’t improved," Southall said. "Rate rises typically take time to filter through to household spending, and that delayed effect is continuing to weigh on sales."

Sales growth stalls as rate rises and higher costs take their toll

Small business sales have settled at a lower level since April. Growth was 4.9% y/y in July, 6.4% in August and 4.3% in September – all below the long-term average (7.8%).

Western Australia (+7.7% y/y) was by far the best-performing state, helped by sustained growth in the mining industry. Queensland (+5.7% y/y), South Australia (+5.3% y/y) and New South Wales (+5.2% y/y) followed. Victoria (+3.8% y/y) and the Northern Territory (+3.7% y/y) had the smallest increases.

Consumer-facing industries such as retail (+2.4%) and hospitality (+2.7%) under-performed the national average , suggesting households remain cautious about discretionary spending. Mining (+12.0%), healthcare (+8.1%) and construction (+7.9%) recorded stronger sales growth, the latter supported by housing demand, major infrastructure projects and data centre investment.

That investment isn't benefiting the small business economy evenly. Sales in information, media and telecommunications grew just 2.4%, suggesting much of the data centre benefit is flowing to larger businesses.

"Major investment in infrastructure is supporting parts of the economy. But the average local café, retailer or service-based business isn't necessarily seeing those benefits. For most small businesses, higher costs and cautious household spending remain the bigger challenges," Southall said.

Hiring holds up, but wage growth moderates

Jobs grew 3.9% y/y in the September quarter, up from 3.1% in the June quarter. Mining (+8.9% y/y), utilities (+8.3% y/y), public administration (+8.1% y/y) and construction (+6.7% y/y) led jobs growth. Hospitality (+0.5% y/y) and information, media and telecommunications (+1.6% y/y) saw only modest increases.

Wage growth slowed to 1.2% y/y. Eight industries recorded rises below 1%: healthcare (+0.4% y/y), education (+0.5% y/y), public administration (+0.8% y/y), real estate services (+0.8% y/y), information, media and telecommunications (+0.8% y/y), manufacturing (+0.9% y/y), wholesale trade (+0.9% y/y) and transport and logistics (+0.9% y/y). Hospitality was the only industry with wage growth above 2%, at 2.8%.

"Labour participation is at record highs," Southall said. "With workers choosing to stay in jobs for longer, there's less pressure on small businesses to offer higher wages. That's consistent with ABS data showing more Australians are taking on second jobs."

“Small businesses are still finding ways to hire, even as costs and softer sales limit what they can pay. The real test over the coming quarters will be whether that hiring momentum holds if sales and costs don’t ease,” Southall said.

To find out more about how Xero Small Business Insights is constructed, see the methodology.

ENDS

Media Contact

Xero Australia | Jess Brophy | +61 431 268 549 | jess.brophy@xero.com

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