New Zealand’s small businesses had a weak sales performance in the June quarter, according to small business platform Xero. 

Data from the latest Xero Small Business Insights (XSBI) released on Thursday shows “consistent underperformance over the past 12 months”. 

The report also found New Zealand small business sales have been falling by 0.1% year on year in the June quarter.

This recent fall, according to the report, follows a “modest” year on year rise of 1.1% in the March quarter and a 0.5% decline year on year in December. 

Xero says this is “well behind” the long-term national average of 6.3% year on year and it’s a step behind Australia’s sales growth of 3% in the June quarter.

Xero uses anonymised and aggregated data to track how small businesses are going. 

Sales weakness was really felt in the North Island – with Northland, Wellington and Auckland recording declines.

Northland had a 3.5% year on year decrease, Wellington dropped 3.1% year on year and Auckland has dipped by 1.3% year on year. 

But centres in the South Island were the opposite – outperforming the national average and showing resilience, Xero says.

Otago saw a 3.9% year on year increase while Canterbury saw a 1.8% year on year bump. 

“One of the few bright spots in the national data is a 4.4% year on year rise in sales in the month of June – the strongest monthly increase since April 2024.”

Sales grow for agriculture sector

The agricultural sector is another bright spot, according to the report, as sales in the agricultural sector continue to see growth. 

The sector saw sales grow 10.9% year on year in the June quarter. This follows 11.1% in March and 14.9% in December.

This reverses 18 months of “tepid performance” in the sector, Xero says.

But “industries more sensitive to discretionary spending and interest rates are facing tougher conditions”, Xero points out.

The construction sector saw sales fall 6.4% year on year in the June quarter which is a decline that started in late 2023, according to Xero’s data. 

The report found hospitality sales fell 2.1% year on year in the June quarter “marking the fifth straight quarter of contraction for the sector”.

Retail sales in June this year were unchanged compared to June 2024, the report found, “following four consecutive quarters of year-on-year declines”.

Xero NZ’s country manager Bridget Snelling says the data on the construction sector was particularly concerning, given this sector’s “multiplier effect across the economy” from retail to manufacturing.

“While the pace of decline has eased in recent quarters, this moderation suggests only tentative signs of recovery.”

Snelling says these subdued figures highlight an ongoing challenge for small businesses in New Zealand. 

“Despite consistent OCR [Official Cash Rate] cuts by the Reserve Bank since August 2024, we’re yet to see the expected boost to consumer and business activity.

“While there are some bright spots like agriculture, the overall picture remains muted.”