Australian agriculture powers SME resilience as broader growth steadies

Australian small and medium-sized enterprises (SMEs) have maintained stable performance in the second quarter of 2025, with the agricultural sector leading growth, according to new findings from the MYOB SME Performance Indicator.

The MYOB SME Performance Indicator, which draws on anonymised observations from more than 200,000 businesses employing between one and nineteen people, revealed that although Gross Value Added (GVA) for SMEs is 5% lower than the same period last year, overall profitability and productivity in the SME sector remain solid as the economy continues to adjust following the COVID-19 pandemic.

Sector performance

The report identifies mining, public administration and agriculture as the strongest-performing sectors over the previous three months. By contrast, utilities, hospitality, and arts and recreation have registered lower levels of performance. The MYOB SME Performance Indicator calculates GVA by aggregating millions of transactional data points from small businesses and calibrating performance against the wider economy. Productivity is assessed based on how much output a business produces for a given input, indexed against the overall GVA figure.

Paul Robson, Chief Executive Officer of MYOB, commented on the persistence of stabilisation among Australian SMEs throughout 2025.

"The latest Indicator demonstrates that Australian SMEs have remained resilient. Profitability and productivity have held steady and payroll growth per employee has kept pace with the wider economy," he said.

Robson added, "We saw early signs of performance calibration at the end of 2024 and it's pleasing to see this maintained in the first half of this year.

"Looking ahead, broader economic conditions are becoming more supportive for SMEs, with inflation easing and a recent cash rate cut from the RBA. These developments should provide some relief to Australian households, resulting in greater consumer spending."

Robson also referenced Australia Post's recent announcement on low-value parcel tariffs for deliveries to the US, noting concerns such as potential delivery disruptions and increased operational pressure for SMEs exporting to North America.

SME resilience after pandemic

Since the COVID-19 pandemic, the SME sector has experienced significant shifts, including an increase in startups, and a number of businesses growing beyond the small enterprise category. Despite the modest decline in new small business creation post-pandemic and ongoing hurdles such as US tariffs, higher operating costs, and reduced consumer spending, many small firms have retained robust profitability and productivity.

Agriculture sector outperforms

The report highlights agriculture as the top-performing SME sector this quarter, recording a 13% rise in activity over the past year and a 5% increase in GVA over the quarter. This growth, attributed to sustained agricultural commodity prices, buoyant export demand, and progressive productivity made possible by accelerated technology adoption, has been achieved alongside a declining sector workforce, which has decreased from 360,000 to around 300,000 employees over the past five years due to automation and digitisation.

The future for the agriculture sector looks positive, though ongoing economic challenges such as persistent US tariffs may affect future performance.

"The uplift in performance for Australian small businesses within the agricultural sector is encouraging for the industry and the SME sector more broadly," said Paul Robson.

"The resilience of agricultural SMEs is further reflected by their growth amidst significant hurdles, including the introduction of US tariffs and several flood events that caused localised disruption for many of our farmers."

Economic outlook

Small businesses in Australia continue to contribute around a third of the country's GDP. The insights from the MYOB SME Performance Indicator suggest that, while the strongest growth over the past year has been in sectors with significant price changes - mainly mining and agriculture - there may be broader sector growth in the coming year.

Alex Hooper, Associate Director and Economist at Oxford Economics Australia, commented on the resilience and adaptability of the SME sector.

"Even as the number of SMEs has eased back from pandemic highs, the sector continues to demonstrate remarkable resilience," she said.

"Individual business profitability and productivity, underpinned by strong payroll growth, highlights the ability of SMEs to lift wages in line with broader economic trends.

"This adaptability has allowed SMEs to turn a period of adjustment into a platform for future growth. And, with rate cuts and easing inflation creating a more supportive environment, SMEs are well positioned to continue contributing meaningfully to Australia's economy."