Australia\u2019s small and medium-sized enterprise (SME) sector extended its growth streak through the final quarter of 2025, with the latest MYOB SME Performance Indicator confirming another period of expansion and the strongest half-year result since 2023.<\/p>\n
The Indicator, based on anonymised performance data from more than 200,000 Australian businesses employing between one and 19 people, rose 1 per cent between October and December and 3 per cent across the year.<\/p>\n
The gains reinforced the gradual improvement seen since early 2025, with public construction and manufacturing each growing 3 per cent in the December quarter.<\/p>\n
This follows a 1 per cent lift in SME output in the three months to September, driven by manufacturing and financial services (both rising 6 per cent) and property services (5 per cent), marking two consecutive quarters of expansion.<\/p>\n
The Indicator measures aggregate Gross Value Added (GVA), indexing SME performance against national GVA to gauge the sector\u2019s overall productivity.<\/p>\n
Employment across SMEs remained broadly stable during the year, while productivity improved significantly.<\/p>\n
GVA per employee increased, and profitability stayed strong \u2014 particularly in construction, which recorded a 1.18 per cent rise on September levels and 5.96 per cent year-on-year.<\/p>\n
Although SME performance still lags the wider economy compared with pre-pandemic levels, the gap continues to narrow.<\/p>\n
SMEs are now operating around 2 per cent below overall GDP, a marked improvement from February 2025, when the shortfall was six percentage points.<\/p>\n
MYOB CEO Paul Robson said the consecutive quarters of growth signal strengthening conditions for smaller businesses.<\/p>\n
\u201cThe September and December quarters show sustained momentum,\u201d Paul said.<\/p>\n
\u201cThe Indicator confirms the sector has seen gradual improvement through 2025.<\/p>\n
\u201cDespite ongoing cost and capacity pressures, SMEs are lifting productivity and maintaining investment.\u201d<\/p>\n
Robson noted that the drivers of growth had shifted throughout the year.<\/p>\n
\u201cIn September, manufacturing, financial services and property sectors led growth,\u201d he said.<\/p>\n
\u201cBy December, construction had stepped up alongside manufacturing, helping stabilise the outlook heading into 2026.\u201d<\/p>\n
Construction emerged as the standout contributor to SME performance in late 2025, rising 3 per cent over the quarter and 5.3 per cent annually \u2014 its strongest result in three years.<\/p>\n
The sector, which represents around 23 per cent of SME GVA, accounted for roughly 45 per cent of total SME growth during the year, offsetting weaker consumer-facing industries.<\/p>\n
A major tailwind came from the expansion of the Home Guarantee Scheme on October 1, 2025, which removed caps on first-home buyer support and lifted income thresholds.<\/p>\n
The changes triggered a surge in residential construction and renovations, with trades such as tilers, plumbers, electricians, painters and landscapers reporting brisk demand as first-home buyers re-entered the market.<\/p>\n
Public investment also provided momentum.<\/p>\n
The $16.5 billion infrastructure package from the 2024\/25 Federal Budget advanced from planning stages to full implementation during 2025, supporting SMEs engaged in projects across Western Sydney, Western Australia\u2019s METRONET, and national highway upgrades.<\/p>\n
Construction added nearly 8,000 workers over the year, even as overall SME employment edged slightly lower. Productivity gains and easing costs helped protect margins.<\/p>\n
\u201cConstruction SMEs are central to housing and infrastructure delivery, and their performance has helped keep overall SME growth positive,\u201d Paul said.<\/p>\n
\u201cThe second half of 2025 delivered consecutive quarters of growth, narrowing the gap with the broader economy and placing SMEs in a steadier position entering 2026.<\/p>\n
\u201cIf infrastructure and housing pipelines remain in place and businesses continue investing in productivity, we expect SMEs to maintain a cautiously positive trajectory, even with interest rates remaining higher for longer.\u201d<\/p>\n
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