NZ small business sales show slow growth as jobs decline
Xero Small Business Insights (XSBI) data indicates sales growth for New Zealand small businesses, although the pace lags behind long-term averages and real growth remains negative when adjusted for inflation.
The report found that for the first time in two and a half years, quarterly sales rose by 1.9% year-on-year (y/y). However, this growth represents a decline in inflation-adjusted terms, suggesting persistent challenges in the sector.
Bridget Snelling, Country Manager - Aotearoa New Zealand at Xero, commented on the findings, highlighting the continued difficulties faced by small businesses, yet acknowledging some signs of improvement compared to recent quarters.
"The last four months have shown positive sales growth, the longest consecutive run since mid-2023. Following the Reserve Bank of New Zealand's interest rate cuts, the XSBI data suggests extra spending is gradually flowing through to small businesses."
The report notes that the recent 1.9% y/y sales increase remains well below New Zealand's historical national sales growth average of 6.2% y/y. Regional data showed Auckland and Wellington returning to modest growth at +0.6% y/y and +0.4% y/y respectively after a period of underperformance. Canterbury and Otago continued to outperform, recording sales growth of +4.3% y/y and +6.3% y/y respectively.
Jobs contraction persists
Despite some improvement in sales, jobs in small businesses decreased by 1.2% compared to the previous year during the September quarter. This follows a similar contraction noted in the June quarter.
Snelling explained the differing trajectories in sales and employment, attributing it to the delayed effect of increased sales on hiring decisions. She said, "Businesses will want to see more sustained levels of sales growth before building back confidence to increase their workforce."
Across regions, Canterbury was the only one to experience positive jobs growth in the September quarter, corresponding to the region's consistent sales performance.
Sector performance
Agriculture, which had previously shown strong double-digit growth for three consecutive quarters, saw its expansion moderate to a 3.3% y/y sales increase in the September quarter, down from 11.1% y/y in the prior quarter.
Snelling commented, "Though still growing, it's a concern to see agriculture sales slow as it has been one of the few bright spots in the New Zealand economy this year. The solid sales performance earlier in the year has supported jobs which were up 0.8% year-on-year, one of only three industries XSBI tracks to record positive jobs growth in the September quarter."
The manufacturing and professional services industries saw steady performance, continuing a trend of positive momentum throughout 2025. Manufacturing sales increased by 2.9% y/y, with a 0.6% y/y rise in jobs. Professional services saw sales up 2.4% y/y and jobs up 1.8% y/y. Snelling cited these two industries as the only tracked sectors experiencing three consecutive quarters of positive growth in both sales and employment.
Challenges in key sectors
The report identifies ongoing challenges in the construction, hospitality, and retail industries. Construction saw sales fall by 0.7% y/y and jobs remain 3.9% lower than a year ago, marking seven consecutive quarters of year-on-year declines in employment. Hospitality recorded 1% y/y sales growth, but jobs decreased by 3.9% y/y. Retail sales grew by 2.9% y/y, but experienced a 1.2% y/y decline in jobs.
Snelling linked these job market conditions with youth employment trends, noting, "While we're not out of the woods yet, there are some hopeful signs on the horizon and the Christmas period will be telling. One way we can all bring some community spirit is by making an effort to shop local and support small businesses this festive season."
Official Statistics New Zealand data shows construction, hospitality, and retail are the largest employers of young people, underscoring the impact of job losses in these sectors on youth opportunities.
