Xero data shows signs of recovery for Aussie small businesses as sales rebound in September quarter

Melbourne — 30 October 2025 — Global small business platform, Xero, today released its latest Xero Small Business Insights (XSBI) update, revealing small business sales grew 5.5% in the September quarter – the strongest quarterly result in two years. The data suggests the benefits of official interest rate cuts may finally be flowing through to consumer spending and the small business economy.

September quarter at a glance:

• Sales growth rose to +5.5% year-on-year (y/y) in the September quarter, up from +3.9% y/y in June - the strongest quarterly result in two years.
• Jobs growth grew +2.7% y/y, down from +3.0% y/y in June, with a notable dip in September (+2.0% y/y).
• Tasmania led the states with +6.7% y/y sales growth, its best performance since early 2023.
• Construction was the standout industry, with +6.6% y/y sales growth and +3.9% jobs growth - both two-year highs.

Sales on the right trajectory

Small business sales showed a solid recovery in the quarter, following a softer 3.9% y/y rise in the June quarter. While still below the long-term average of 7.8% y/y, the growth reflects renewed momentum in the sector. Monthly data showed a familiar pattern of sales spikes following interest rate cuts, with September (+8.1% y/y) and June (+7.5% y/y) both following the Reserve Bank of Australia (RBA) policy decisions. These short-term boosts have yet to deliver sustained above-average growth, but the data aligns with the RBA’s September statement, noting improving private consumption driven by rising real wages, tax cuts, lower interest rates, and effects from higher house prices.

Workforce trends show cautious optimism

Jobs growth slowed in the September quarter, likely reflecting the lagging impact of softer mid-year sales and ongoing uncertainty for small business owners. Despite this slowdown, more small businesses increased their workforce than in recent months - 28.8% grew their teams, the highest proportion since December 2023. However, slightly more businesses also reduced staff, with 24.1% cutting jobs compared to 23.7% in June.

Angad Soin, Managing Director ANZ & Global Chief Strategy Officer, said: “This is the most encouraging sign we’ve seen for the Australian small business community in two years. After a period of intense pressure, Xero Small Business Insights data shows the grit of entrepreneurs , coupled with stabilising economic conditions, is starting to turn the tide. As we head into the holiday season, including events like Black Friday, it’s a reminder for all of us to shop local and continue to support businesses at the heart of our communities.”

Louise Southall, Xero Economist, said: “These figures are tentative but encouraging signs that the Australian economy has achieved the soft landing the RBA has been aiming for. The challenge for the central bank has always been to cool inflation without stamping out growth or lifting unemployment. This data, which shows sales for small businesses accelerating while jobs growth only moderating slightly, suggests its strategy is having the desired effect.”

Tasmania tops sales growth, while hospitality employment continues to fall

Sales growth was broad-based across regions, with Victoria rebounding to +4.7% y/y and Tasmania outperforming with +6.7% y/y (up from 2.5% y/y and 2.4% y/y in the June quarter respectively). Jobs growth was more subdued, with Western Australia (+3.9% y/y) and Queensland (+3.5% y/y) leading the way.

At an industry level, 15 of 17 sectors tracked by XSBI recorded stronger sales growth than in the June quarter. Most notably, construction sales increased 6.6% y/y - the highest increase in two years, while retail trade (+4.8% y/y), and hospitality (+4.4% y/y) also saw improvements. Construction jobs were also higher (+3.9% y/y), while hospitality jobs declined for the seventh time in eight quarters (-0.5% y/y).

You can find the latest Xero Small Business Insights Australia Update here. To find out more about how Xero Small Business Insights is constructed, see the methodology.

ENDS

Media Contact

Xero Australia | Jess Brophy | Director of Communications, ANZ | +61 431 268 549 | jess.brophy@xero.com

Note: The COVID-19 pandemic caused significant volatility in many datasets, including XSBI. To account for this the XSBI jobs data series previously had a 'COVID-19 adjustment' made to it. Sufficient time has now passed since the end of the pandemic period to remove this temporary adjustment. As a result, historical XSBI jobs growth data has been subjected to larger than usual revisions in this latest publication.

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.

Disclaimer

This media release 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 release 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.