Xero reports small business sales slowdown as fuel prices rise

Xero’s Small Business Insights (XSBI) June‑quarter data show that higher fuel prices linked to the Middle‑East conflict are squeezing household budgets and reducing spend in small businesses across Australia, Canada, New Zealand, the United Kingdom and the United States. Overall small‑business sales growth fell from 7.9% in the March quarter to a more modest pace, with retail growth at only 3.4% year‑on‑year, hospitality at 2.1% and arts and recreation at 3.5%.

Sectors tied to discretionary consumer spending recorded the sharpest slowdowns, while mining (+14.0%), utilities (+13.1%) and construction (+10.8%) continued to grow strongly. New Zealand’s export‑focused agriculture sector bucked the trend, posting a 16.3% increase in sales. Jobs growth eased to 3.0% year‑on‑year and wage growth slowed to 2.4%. Payment times improved, with the average invoice paid in 22.9 days and late payments falling to six days, reflecting typical end‑of‑financial‑year patterns.

Xero economist Louise Southall said the data illustrate a “two‑speed economy” where rising interest rates and elevated fuel prices are pulling the heat out of consumer‑facing businesses while infrastructure‑linked sectors remain resilient.