Navigate challenging sales with confidence: What the June quarter XSBI data means for your business

We know the journey of a small business owner can be challenging: as a small business owner, you feel the pulse of the economy directly. The Xero Small Business Insights (XSBI) program is designed to help you understand these trends, navigate the current landscape, and make confident, informed decisions for your business.

The latest XSBI data for Australia, New Zealand and the UK paints a picture of slowing small business sales growth in recent months. Let’s explore what this means for you.

Sales growth slows across the board

Central banks in Australia, New Zealand and the UK have reduced official interest rates, but this hasn’t translated into strong, sustained sales growth for most small businesses. 

Here’s a look at what’s happening in your country:

Australia: After sales growth rates of 4–5% year-on-year (y/y) in late 2024 and early 2025, sales growth for Australian small businesses slowed to 3.0% y/y in the June quarter. This is well below the long-term average of 7.8% y/y.

New Zealand: Small business sales have barely grown over the past nine months. The June quarter saw a 0.1% y/y fall in sales, following a modest 1.1% y/y rise in March and a 0.5% y/y fall in December 2024. 

United Kingdom: The UK also saw a significant slowdown, with sales growing just 2.3% y/y in the June quarter, less than half the pace of the March (5.5% y/y) and December (5.1% y/y) quarters. This is also below the 8.7% y/y long-term average.

Industry spotlights

XSBI data revealed that sales performance varied across industries, with trading especially hard for those exposed to discretionary spending.

Australia: Sectors linked to government spending, like healthcare and social assistance (+7.2% y/y), and public administration (+7.9% y/y), continued to perform well in the June quarter. In contrast, industries reliant on household discretionary spending, such as hospitality (1.5% y/y), had softer sales growth. Education sales were 1.2% lower than a year ago in the June quarter, probably due to fewer international students.

New Zealand: Agriculture was a standout, with sales growing over 10% y/y in the previous three quarters. In contrast, industries sensitive to discretionary spending or interest rates, such as construction, faced significant challenges. Construction sales, which have been declining since mid-2023, fell 6.4% y/y in the June quarter. This is concerning because a weak construction sector can drag down other industries like retail.

United Kingdom: Retail sales were the weakest industry in the June quarter (-0.6% y/y) while real estate services have seen no growth for a year. Hospitality sales growth also remained below the national average (+1.5% y/y). These trends highlight a reduction in discretionary spending by households. The one exception in the discretionary spending category was arts and recreation which showed 3.4% y/y growth.

What this means for your business

This challenging sales environment makes effective business management more critical than ever. Despite tough conditions, as a small business owner, you can take some powerful steps to supercharge your business.

Focus on cash flow: With sales stagnating or slowing, it’s really important to be diligent when managing your cash flow. Do what you can to ensure you get paid as quickly as possible, by offering convenient and multiple payment options, and keep a close eye on your expenses. 

Work with your accountant in real time: Economic uncertainty is high, largely due to constant shifts in US trade policy. Heightened trade tensions mean economists now expect global economic growth for 2025 to be slower than they thought it would be earlier in the year. The uncertainty could impact all small businesses, even those not directly involved in exports. Domestic factors, like potential new employment legislation in the UK, are also adding to the uncertainty. Making decisions about hiring new staff, expanding product offerings and buying new equipment is hard if you aren’t sure what will happen to the economy or your customers. In such a climate, planning is difficult, but anticipating potential impacts helps, and your accountant can support you to understand your numbers and navigate this period with greater confidence.

Look after your customers: Many small businesses depend on regular customers, especially during tough periods. One way you can build on their loyalty is to reward it by offering regular specials or loyalty programs for your best customers. 

The current economic climate demands vigilance and adaptability from small business owners. By staying on top of your financial health and carefully monitoring broader economic trends, you can position your business to navigate these challenges successfully and thrive.

Want to know more? See the Xero Small Business Insights webpage for more detailed insights.