Australia’s small and medium sized enterprise (SME) sector continued its upward trajectory in the three months to September 2025, according to the latest MYOB SME Performance Indicator - the strongest half-year result since 2023.
SME output rose 1%, signalling a more sustained recovery. Growth was led by manufacturing and financial services (both +6%), and property services (+5%).
Harnessing anonymised data from more than 200,000 Australian businesses employing between one and 19 people, the MYOB SME Performance Indicator measures the aggregate Gross Value Added (GVA) of small and medium-sized enterprises by calibrating SME performance against the economy as a whole. The index aggregates millions of transactional data points to provide one of the most detailed and timely measures of SME economic contribution.
Employment held steady, productivity strengthened and GVA per employee increased while profitability continued to improve. These trends indicate that the SME sector is entering a phase of stabilisation and steady growth, underpinned by solid productivity gains.
GVA represents the value of goods and services produced within a particular area, industry, or sector. Productivity is calculated by measuring how much output a business produces relative to its input, with the MYOB SME Performance Indicator indexing this against national GVA to gauge the health and trajectory of Australia’s SME sector.
Paul Robson, CEO of MYOB, said the most recent outcome is an encouraging sign that green shoots are showing in the SME sector.
“What we’re seeing in this quarter’s data is more than a modest uplift; it’s an early indication that the fundamentals for Australia’s small and medium businesses are starting to strengthen,” said Paul.
“After two years defined by cost pressures, supply chain friction and cautious consumer spending, SMEs are beginning to benefit from easing input cost growth and improving demand in key sectors.
“While challenges remain, this quarter’s results suggest the sector is recalibrating and entering a more stable phase of recovery, one built on improved efficiency and renewed confidence.”
While SME performance sits just under the broader economy relative to their respective pre‑pandemic levels of activity, the results point to the potential for further growth. The narrowing gap highlights the steady progress being made by small businesses, even as consumer-facing sectors adjust to ongoing shifts in demand.
Manufacturing sector spotlight
The SME manufacturing sector rose 5% over the three months to September 2025, marking a 1% increase compared to this time last year.
Manufacturing SMEs are benefiting from renewed government and investor confidence. Larger firms remain more capitalised, but smaller enterprises are showing agility and innovation, particularly in advanced manufacturing, materials processing, and low-emissions technologies.
“The uplift in performance for Australian small businesses within the manufacturing sector is an encouraging sign for both the SME economy and the Australian manufacturing industry more broadly,” said Paul.
“The resilience of manufacturing SMEs is particularly notable, given the challenges they’ve faced, from supply chain disruptions and energy cost volatility to global competition and shifting policy settings.”
While employment in manufacturing SMEs has remained steady - a long-running trend in the manufacturing industry - the nature of work is evolving. Demand is growing rapidly for higher-skilled roles across advanced electronics, Internet-of-Things (IoT) integration, robotics, and smart automation, reshaping the workforce and supporting higher-value output.
“The September result marks the longest streak of continuous growth monthly growth since 2023,” said Associate Director and economist, Alex Hooper, of Oxford Economics Australia.
“This suggests SME performance has turned the corner over the second half of 2025, putting businesses in a stronger position to finish off the year and building a solid platform for continued growth into 2026.
“Increased private sector capital expenditure is a good sign for the near-term outlook or the manufacturing sector. SMEs should be looking to take advantage of the ‘Future Made in Australia’ platform to expand operation in emerging industries.”
The MYOB SME Performance Indicator can be found here.
About MYOB
MYOB is a leading provider of cloud-based business management solutions with a core purpose of helping more businesses in Australia and New Zealand to start, survive and succeed. MYOB’s next-generation technology platforms deliver end-to end solutions for people and finance through to tax, supply chain, projects, employees and customers, empowering businesses with 0 to 1000 employees alongside a network of accountants, bookkeepers and consultants. For more information visit myob.com or follow MYOB on LinkedIn.