Media releasePublished on 26 October 2023

New Xero data shows continued resilience of Australian small businesses despite slowing sales and wages growth

Sales growth still outpacing other XSBI markets

Melbourne — 26 October 2023Xero, the global small business platform, today released its latest data on the health of Australia’s small business economy from the Xero Small Business Index (XSBI), covering July through to September 2023.

September quarter at a glance:

  • Sales growth averaged 6.2% y/y for the September quarter
  • Wages growth averaged 2.7% y/y for the September quarter
  • Jobs growth averaged 2.7% y/y for the September quarter
  • Small businesses waited 22.9 days to be paid in the September quarter

Sales growth continued its slowing trend, rising just 5.5% year-on-year (y/y) in September and averaging 6.2% y/y in the three months to September. These results indicate that sales are now growing below the pre-COVID average (7.8% y/y). Encouragingly, Australia's sales growth results are by far the strongest of the five XSBI countries (Australia, New Zealand, United Kingdom, United States and Canada).

“While small business performance has dropped slightly in recent months, Australian small businesses remain remarkably resilient, given the challenging economic environment of high interest rates and persistent inflation. Despite the prevailing challenges, sales growth in Australia is outpacing other XSBI markets,” said Louise Southall, Xero Economist.

Small Business Index remains steady

Based on aggregated and anonymised transactions from hundreds of thousands of small businesses, the Xero Small Business Index is down two points in September to 121 points. For the three months to September the Index averaged 122 points, only marginally lower than the average for the first half of 2023 (127 points).

Health care sector showing strongest sales growth

Across the industries, sales growth in the three months to September was led by health care (+13.2% y/y), education and training (+10.5% y/y), construction (+8.1% y/y) and public administration and safety (7.7% y/y). The weakest industries were agriculture (-6.2% y/y), wholesale trade (-1.1% y/y) and retail trade (-0.8% y/y). All Australian states and territories reported slower average sales growth in the September quarter, with Queensland the strongest with an increase of 7.5% y/y, while Tasmania was the weakest (2.8% y/y).

Wage growth slows further

Wages growth equated to just 1.9% y/y in September, with the largest wage rises paid by hospitality firms (+4.4% y/y) and the smallest by health care (+1.8% y/y). These results, while positive for inflation and cost control within small businesses, are less positive for the sales outlook as real wages continue to fall. This puts more pressure on already stretched household budgets and leaves them with less disposable income to spend with small businesses.

Jobs growth remains steady

Jobs rose 3.0% y/y in September, similar to the pre-COVID (Jan 2017 to Dec 2019) average. In the three months to September, jobs growth was led by health care (+8.0% y/y), while hospitality (-0.5% y/y) and real estate (-1.0% y/y) saw a decline in jobs. Tasmania was the only state to see a decline in jobs (-0.4% y/y), while job gains were led by Western Australia (+6.0% y/y), South Australia (+4.0% y/y) and Queensland (+3.4% y/y).

Small business payment times holds stable

Payment times have remained largely stable in Australia so far this year (excluding the abnormal June result [1]) with payments to small businesses made on average 6.5 days late. However, payment times varied substantially between industries, with small businesses in health care paid, on average, only 1.9 days late in the three months to September, compared to those in wholesale trade (12.5 days) and education and training (9.5 days).

"Despite this year's challenges, Australian small businesses are holding steady and, in some industries, even thriving. With the holiday period approaching, we encourage Australians to support small businesses where they can. This might mean shopping small, leaving positive reviews or connecting with business owners. While retail and hospitality have had a difficult few months, they will be hoping for a resurgence during the festive season,” said Will Buckley, Country Manager, Xero Australia.

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


Media Contact

Xero Australia | Jess Brophy | +61 431 268 549 |

About Xero

Xero is a global small business platform with 3.7 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also has an extensive ecosystem of connected apps and connections to banks and other financial institutions helping small businesses access a range of solutions from within Xero’s open platform to help them run their business and manage their finances. For four consecutive years (2020-2023) Xero was included in the Bloomberg Gender-Equality Index. In 2021 and 2022, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero is a FIFA Women’s Football partner.

[1] In June the payment time measures were impacted by the end of financial year, which caused both to fall dramatically. This pattern is repeated each year and, as expected, the measure rebounded back to normal levels in subsequent months and has also been revised up from the initial reported time so that the fall is not so dramatic.

For all media inquiries, please contact the Xero media team.

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