SME sector continues upwards trajectory, MYOB data reveals

Growth was largely driven by public construction, up 3 per cent, and manufacturing, also up 3 per cent.

This follows a 1 per cent lift in SME output in the three months to September 2025, led by manufacturing, financial services, and property services, marking consecutive quarters of expansion. 

Drawing on anonymised data from more than 200,000 Australian businesses employing between one and 19 people, the MYOB SME Performance Indicator measures aggregate gross value added (GVA), indexing SME productivity against national GVA to assess sector performance. 

Employment remained relatively stable over the year while productivity improved, with GVA per employee rising and profitability strong, particularly in construction.

Although SME performance remains below the wider economy's pre-pandemic levels, the gap continues to narrow. SMEs are operating at around 2 per cent below overall GDP, an improvement since February 2025.  

MYOB chief executive Paul Robson said consecutive quarterly growth points to strengthening conditions for SMEs. 

“The September and December quarters show sustained momentum,” Robson said.

"The Indicator confirms the sector has seen gradual improvement through 2025. Despite ongoing cost and capacity pressures, SMEs are lifting productivity and maintaining investment," he said.

Paul noted a shift in growth drivers between quarters. 

“In September, manufacturing, financial services and property sectors led growth,” he said. “

By December, construction had stepped up alongside manufacturing, helping stabilise the outlook heading into 2026.” 

Construction was the standout contributor to SME growth in Q4 2025, rising 3 per cent over the quarter and 5.3 per cent annually, its strongest result in three years. According to MYOB data, the sector accounts for around 23 per cent of SME GVA and drove roughly 45 per cent of total SME growth in 2025, offsetting softer consumer-facing conditions. 

A major catalyst was the October 1, 2025 expansion of the Home Guarantee Scheme, which removed caps on first home buyer support and lifted income limits.

MYOB said the changes triggered an immediate surge in residential construction and renovations, with tilers, plumbers, electricians, painters and landscapers reporting sharp increases in workload as first home buyers returned with renewed confidence.

Public investment also flowed through. The $16.5 billion infrastructure commitment in the 2024–25 federal budget progressed from announcements in mid-2024 to full SME engagement throughout 2025, the software firm said.

Projects in Western Sydney, WA’s METRONET and major highway upgrades nationwide supported contractors across the supply chain. 

Construction added nearly 8,000 workers over the year, even as overall SME employment edged down. Productivity gains and easing costs helped protect margins. 

“Construction SMEs are central to housing and infrastructure delivery, and their performance has helped keep overall SME growth positive,” Robson said.

“The 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. 

“If 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.”