Strongest small business sales growth in three years recorded in December

Wellington — 26 February, 2026 — Xero, the global small business platform, today released its Xero Small Business Insights (XSBI) for Aotearoa New Zealand, which saw small business sales climb to a three-year high at the end of 2025.

Data sourced from 144,000 Kiwi small businesses saw sales growth climb 4.8% y/y in the December quarter. This follows a 2.8% y/y rise recorded in the September quarter.

In the month of December specifically, small business sales were up 9.8% y/y - above the long‑term average of 6.2%.

Bridget Snelling, Country Manager - Aotearoa New Zealand at Xero said this particularly strong finish to the year is an encouraging indicator the tide may be turning for Kiwi small businesses.

“This is the clearest evidence we’ve seen in several years that momentum is starting to return,” says Snelling. “Sales growth in the December quarter was the best result in three years, and the strong finish to 2025 suggests confidence is slowly rebuilding among small business owners.”

She said the improvement is likely to be supported by the Reserve Bank of New Zealand’s aggressive easing of interest rates, which began in mid‑2024.

“Lower borrowing costs are starting to flow through the economy,” says Snelling. “That’s easing pressure on households and businesses alike, and thankfully we’re starting to see those changes show up in small business sales.”

New Zealand small business sales outperformed Australia by a small margin, reaching 9.8% y/y and 9.6% y/y in December respectively.

Professional services, manufacturing hotspots of growth, hospo continues to lag

While sales improved overall, performance varied significantly across industries.

Professional services recorded the strongest growth, with sales up 8.6% y/y in the December quarter, driven by a near‑record 18.5% increase in December alone. Real estate and manufacturing also delivered solid quarterly results, with sales rising 6.5% and 5.2% respectively.

Retail trade sales grew 4.5% y/y across the quarter, building on the September quarter’s increase of 3.9% y/y. In contrast, hospitality continued to lag, with sales increasing by just 0.5% y/y, similar to the previous quarter.

“Not every sector is feeling the recovery at the same pace. Professional services and manufacturing are showing strong momentum, while hospitality remains under pressure as consumers continue to be cautious with discretionary spending,” says Snelling.

Regional trends continued to favour the South Island. Sales growth in Canterbury reached 8.0% y/y in the December quarter, while Otago followed at 6.2%.

Both regions outperformed Auckland, where sales rose 4.4%, and Wellington, which recorded growth of 3.7%. Bay of Plenty recorded its strongest sales result since the September quarter 2022, with sales up 6.3% y/y.

Late payment days reach lowest since XSBI records began

Cash flow conditions also improved markedly at the end of the year. Small businesses were paid an average of 4.5 days late in the December quarter, the lowest level since XSBI began in 2017.

The average time it took businesses to be paid after issuing an invoice fell to 24.8 days, down from 25.2 days in the September quarter. Across 2025 as a whole, payment times were largely unchanged from 2024.

“Shorter payment times are a positive development for small business cash flow,” says Snelling.

“However, businesses are still being paid late on average, which shows there is more work to do to improve payment practices across the economy.”

“The recovery isn’t complete, and pressures remain for many business owners. But the improvement we’re seeing at the end of 2025 shows that easing financial conditions are beginning to make a real difference,” says Snelling.

“If this trend continues, 2026 has the potential to be a year of gradual, but meaningful recovery for small businesses across New Zealand.”

ENDS

Media Contact

Xero Aotearoa New Zealand | Kristen Barrett | +64 22 064 2924 | kristen.barrett@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments — on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.