MYOB data shows Australian SME growth surges with digital focus

Australia's small and medium business sector has delivered its strongest half-year results since 2023, according to the latest industry data. Growth was powered by manufacturing, financial services and property services, as measured by aggregate gross value added (GVA) and productivity.

Sector growth

Output from small and medium-sized enterprises (SMEs) rose by 1% in the September quarter. Manufacturing and financial services both recorded a 6% rise, while property services rose 5%. These results reflect a sustained recovery, despite ongoing headwinds from previous years.

The data, collected from more than 200,000 Australian businesses with between one and 19 employees, show overall improvement in productivity, with GVA per employee increasing. Employment levels held steady, indicating that businesses are finding ways to drive efficiency and profit without significant changes in workforce size.

Challenges easing

MYOB Chief Executive Officer Paul Robson said SMEs are showing signs of strengthening fundamentals, as cost pressures diminish and demand improves in key sectors.

"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 Robson, CEO, MYOB.

This quarter's results indicate SMEs are adjusting to a more stable phase of recovery. While performance still trails just below pre-pandemic levels, the gap relative to the wider economy has narrowed. Cautious optimism prevails as customer-facing businesses adapt to evolving demand.

Manufacturing momentum

Manufacturing SMEs achieved their longest period of continuous monthly growth since 2023, benefiting from renewed government and investor support. The manufacturing sector posted a 5% lift over the quarter-an increase of 1% from the previous year.

Investment in advanced manufacturing, materials processing, and low-emissions technologies is supporting sector momentum. Smaller enterprises are demonstrating agility in adapting to new technologies as larger manufacturers maintain their capital advantage.

"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 Robson.

Challenges in the manufacturing sector, such as supply chain disruptions, energy price volatility, global competition, and evolving policy settings, remain. Nonetheless, the resilience of SMEs in this area is evident through sustained output and productivity.

Changing workforce

Employment numbers within the manufacturing SME sector have remained broadly stable. However, there is a shift underway towards higher-skilled positions. Roles in advanced electronics, IoT integration, robotics, and automation are increasingly in demand as SMEs pursue higher-value work and respond to changing industry requirements.

MYOB's analysis suggests that the September quarter marked a turning point for the sector, with expectations of further improvement in the coming year.

"The September result marks the longest streak of continuous growth monthly growth since 2023," said Alex Hooper, Associate Director and economist, Oxford Economics Australia.

He said increased private sector capital expenditure bodes well for the industry's near-term prospects and encouraged SMEs to capitalise on platforms targeting expansion in new industries.