New Zealand Small Business Insights

Small business sales stagnate

Published: 31 July 2025

Xero Small Business Insights (XSBI) data for New Zealand shows sales have hardly grown in the nine months since data was last released. This timeframe suggests that the current softness in sales can't be entirely attributed to the rise in global uncertainty of recent months and also reflects challenges in the domestic economy.

Sales in small businesses fell 0.1% year-on-year (y/y) in the June quarter, after growing only 1.1% y/y in the March quarter and falling 0.5% y/y in the December quarter. These weak sales results happened despite the Reserve Bank of New Zealand cutting interest rates by 225 bps since August 2024. Sales were lower than the same month in the previous year in four of the past nine months. One of the few positive signs in the national data is the 4.4% rise in sales during June - the largest rise in sales since April 2024. For context, the long term average for this series is 6.3% y/y, so even 4.4% y/y is a below average result.

In terms of regional sales, the weakness in sales in the June quarter was centred around Auckland (-1.3% y/y), Northland (-3.5% y/y) and Wellington (-3.1% y/y). The South Island population centres of Otago (+3.9% y/y) and Canterbury (+1.8% y/y) performed better than the national average.

In terms of industry performance, the standout is agriculture - sales grew 10.9% y/y in the June quarter after growing 11.1% y/y in the March quarter and 14.9% y/y in the December quarter. These results, that run strongly contrary to the rest of the economy, come after several quarters of tepid sales performance in agriculture. Those industries that are more dependent on discretionary spending or sensitive to interest rates have found conditions particularly challenging. This is despite the aggressive easing in interest rates by the RBNZ over the past year. Construction sales fell 6.4% y/y in the June quarter and have recorded lower sales than the same quarter a year ago since mid-2023. This is concerning because construction is an industry that has strong multiplier effects across an economy. A new house requires new floor and window coverings and the new owners often buy new furniture and white goods. When this sector is performing poorly it can be a drag on other connected sectors such as retail. Retail sales were the same as in June 2024, after declining in year-on-year terms for the previous four quarters. Although the declines in sales have been smaller in recent quarters, pointing to tentative signs of improvement. Hospitality sales fell 2.1% y/y in the June quarter - the fifth successive quarter of sales declines.

Heightened global uncertainty not helpful for small businesses

For small business owners, this data reflects just how tough it is to make a sale right now. In such circumstances it is more important than ever for small business owners to stay on top of cash flow, ensure they get paid as quickly as possible and keep an eye on costs.

These sales results are being reflected in overall concerns amongst small business owners about the future of their business. A Xero commissioned poll¹ in June of 152 New Zealand small businesses showed 29% are feeling negative about the future prospects of their business. This is up from 23% when asked the same question in May. Nevertheless, the majority (71%) of Aotearoa businesses are still feeling positive about the future prospects for their business, despite current challenges. The reasons given for this positivity were having more work available (36%), making more sales (32%) and reducing costs and overheads (24%).

Planning is difficult for small business owners currently, amid heightened uncertainty about the global economic outlook. On the one hand the Reserve Bank of New Zealand has aggressively cut the official cash rate, currently at 3.25%. This is 225 bps lower than it was at the start of this easing cycle in August 2024. These lower interest rates should mean lower debt repayments for small businesses and also give customers some extra dollars to spend. On the other hand, New Zealand is a small open economy that is dependent on exports. Direct impacts from US tariff policy on New Zealand are expected to be limited. The risk for New Zealand is what these tariffs do to the global economy. Any slowdown in global growth is likely to flow through the domestic economy and impact small businesses, even those not directly involved in exporting.

¹ All figures, unless otherwise stated, are from an online survey commissioned by Xero in June 2025. Responses are among small businesses in Australia (306), New Zealand (152), UK (600) and US (321). Options have been edited for readability.

For more information on the XSBI metrics, see our methodology page.

Disclaimer

This report was prepared using Xero Small Business Insights data and publicly available data for the purpose of informing and developing policies to support small businesses.

This report includes and is in parts based on assumptions or estimates. It contains general information only and should not be taken as taxation, financial, investment or legal advice. Xero recommends that readers always obtain specific and detailed professional advice about any business decision.

The insights in this report were created from the data that was available as at the date it was extracted. Data used was anonymised and aggregated to ensure individual businesses can not be identified.