New Zealand’s small businesses have just recorded their strongest quarter of sales in almost four years, and hardly any of it has shown up in job numbers or pay packets.
Xero’s Small Business Insights update for April to June, published on Thursday, shows sales across the accounting software company’s New Zealand customer base rose 8.6 percent on the same quarter a year earlier. That is the best result since the September quarter of 2022, and the first quarter since December 2022 in which sales growth has beaten the long-run average of 6.2 percent. It builds on a 5.1 percent rise in the March quarter.
The labour figures in the same report tell a different story. Jobs at small businesses were up only 0.7 percent on a year earlier, and average wages rose just 1.5 percent. That wage figure is the smallest annual increase in the entire Xero series, which runs back to the March quarter of 2017, and it sits well below the historical average of 3.6 percent.
Xero country manager Bridget Snelling told RNZ the numbers showed “what you could call a two-speed recovery”, with agriculture “doing the heavy lifting” while consumer-facing sectors stayed under pressure. She said the result was cause for “cautious optimism”, with improvement across industries but continued uncertainty about fuel costs, global events, consumer spending and investment decisions.
“Sales are increasing, but that’s a positive kind of early indicator of what might follow, but we haven’t seen jobs and wage growth following in the same way just yet,” Snelling said.
The industry breakdown shows why the national number flatters the picture. Agriculture sales were up 16.3 percent, which Xero says lines up with the solid export returns reported over the past year. Construction rose 11 percent and manufacturing 8.6 percent, although Xero cautions that both were partly the result of very weak comparisons with the June quarter of 2025. Retail trade managed 6.4 percent despite worries about what high petrol prices are doing to discretionary spending. Hospitality was the softest sector tracked, up just 2.9 percent.
Farming is carrying the result, and farming is not where the jobs are. Despite that 16.3 percent lift in sales, agricultural jobs were only 0.6 percent higher than a year ago. The sector driving the national sales figure is close to the least likely to put on staff, which is the simplest explanation for why a strong headline number has produced almost no employment growth.
Three sectors had fewer people on the books than a year earlier. Hospitality was down 5.6 percent, retail trade down 1.3 percent and other services down 0.3 percent. The strongest jobs performers were real estate services, up 6.1 percent, and administrative services, up 5.1 percent, and Xero notes both were coming off weak results in the same quarter last year.
The regional pattern follows the same rural line. Canterbury sales were up 12.3 percent, ManawatΕ«-Whanganui 11.9 percent, Waikato 10 percent and Southland 9.6 percent. Auckland and Wellington were solid but slower, at 7.2 percent and 7.1 percent. Marlborough, Nelson and Tasman, a wine and tourism region newly added to the series, managed only 4.4 percent.
On jobs the regional split is starker. Canterbury was the only clear standout, up 4.5 percent. Small businesses in Auckland, Wellington, Bay of Plenty and Northland all employed fewer people than a year ago, down 0.2 percent, 0.1 percent, 0.9 percent and 1.9 percent respectively. Between them those four regions hold a large share of the country’s population, which means most New Zealanders live somewhere that small business employment went backwards over the year.
One figure inside the report deserves more attention than the headline. Jobs across the whole sample fell 0.3 percent in the month of June alone, which is what dragged the quarterly result down to 0.7 percent. Xero says more data is needed to know whether that is the start of another downturn or a temporary pause in an ongoing recovery.
Payment times, the other thing Xero tracks, barely moved. Small businesses waited an average of 24.1 days to be paid after issuing an invoice, close to the 24 days of the March quarter and better than the 24.9 day average through 2025. Late payments stretched to 4.7 days from 4.3 days, still better than the 5.3 day average last year. Xero calls it disappointing that small businesses are still paid late on average, while noting New Zealand firms are paid a good deal closer to time than their counterparts in Australia at 6 days, the United Kingdom at 8.3 days, the United States at 8.5 days and Canada at 11.3 days.
The Xero wage figure is an average of what its own small business customers actually paid, so it is not directly comparable with the official wage measures Statistics New Zealand publishes. The direction still matters. A 1.5 percent rise in average pay sits against household living costs that rose 3.2 percent in the year to the June quarter, driven largely by petrol. On those numbers, staff at small firms went backwards.
The official labour market picture is about to be updated. The most recent read from Stats NZ had unemployment at 5.3 percent in the March 2026 quarter, down slightly from 5.4 percent in December, with 163,000 people out of work and underutilisation stuck at 12.9 percent. Labour market statistics for the June quarter are due on 5 August, and the Xero data suggests there is little in the small business sector to lift them.
All of this sits inside a wider argument about how far the recovery has actually come. The Reserve Bank lifted the official cash rate 25 basis points to 2.5 percent on 8 July, its first increase since 2023, saying it had grown more confident about the economy while acknowledging that momentum was lost in the June quarter as the oil shock hit activity. Xero points to OECD forecasts of 1.4 percent growth in 2026 and 2.2 percent in 2027, alongside a warning that the recovery remains fragile because of the effect of prolonged high fuel prices on household spending.
For small business owners deciding whether to advertise a job or lift someone’s hourly rate, the sequence usually runs sales first, confidence second, hiring third. The first part has arrived. Snelling said the rest depends on the middle step.
“We need more business confidence to then see an improvement in wage growth and in employment growth,” she said.
The report draws on anonymised and aggregated data from about 144,000 New Zealand small businesses, part of a global sample of more than 1.1 million.
Has your business started hiring again, or are you waiting to see whether the sales lift holds? Tell us what you are seeing in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job π
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