Growing the top line, draining the reserves
Across Shift’s customer base, revenue is holding up and liquidity is under pressure.
Executive summary
The SME economy is too important to be this poorly measured.
No consistent definition of “SME” exists across regulators, lenders or commentary. That makes SME data unreliable and hard to compare. SMEs need more data, and more consistent data, to have a voice in policy and markets. Consistent definitions are the precondition for that. This report defines a consistent model for SMEs and their small, established and corporate segments, based on a simple annual turnover measure, mapped against the other definitions used across the market.
SMEs behave as a distinct segment of the economy, one that moves largely in lockstep.
Dispersion across the SME population is a size and industry story, not an individual-business one, and thin-tailed: insolvencies and outsized winners are real, but rarer than headline commentary implies. This has two implications. First, policy that targets SMEs, or affects them incidentally, lands on most of the population at once, not a few. Second, the sector carries a shared vulnerability: a shock hits SMEs broadly, without fat tails to absorb it.
The Index sits at -0.3, a mix of rising revenue and falling liquidity.
The Index has fallen since its recent peak, though it remained in positive territory through May. Revenue itself is positive, while liquidity’s 6-month improvement still remains in negative territory.
The aggregate hides clear sector leaders and laggards.
Construction is the clear leader, across both revenue and liquidity, whilst Accommodation and Food Services is the clear laggard. The rest cluster mostly around zero.
Smaller businesses are under the most pressure.
Liquidity for small businesses is down materially more than for corporate, a spread of roughly 9 points as a 3-month average basis. Revenue growth is more compressed. Small businesses are still growing, but by drawing on their own reserves, not from strength.
A note from the Chief Executive
Australia’s small and medium enterprises (SMEs) are central to the economy, and among the least well understood. There is no consistent, timely measure of how they are faring, and surprisingly little live data describing it. This report brings together a consistent definition with what most sources lack: live streaming transaction data drawn from Shift’s customer base of SMEs’ business bank accounts across the whole economy.
The Shift SME Economy Index measures the performance of the SME economy. Growth alone cannot show that, so it reads two things together: revenue, the top line, and liquidity, the cash a business actually holds and moves. Revenue on its own is a blunt signal. A business can grow its top line while draining its reserves, and that is precisely what the typical SME is doing. Performance is the combination: whether a business is growing, and whether it can sustain itself while it does.
Liquidity carries particular weight for SMEs because profitability is almost unobservable from outside the business. Owners blend personal and business accounts and move money through Director loans, salary and drawings, so reported profit reflects how the business is set up for tax purposes as much as how it’s actually performing. Cash is harder to obscure. What a business holds, and how that balance moves over time, is the most reliable external read on how resilient it is. That is why liquidity sits alongside revenue at the core of the Shift SME Economy Index.
The Shift SME Economy Index is also built from behaviour rather than opinion. Sentiment surveys capture what owners say they expect or feel, sampled, self-reported and lagged. The Shift SME Economy Index captures what businesses actually did, drawn from live banking transactions across the customer base, reflecting real activity in close to real time rather than recalled impressions.
This data lets us ask not just how the SME sector is doing, but how unevenly SMEs are faring relative to one another, and the dispersion is what the headline figure alone cannot show. It also lets us see how that economy is financed, a market we know directly as Australia’s largest non-bank provider of unsecured SME lending.
This report is part of an ongoing series we will continue to publish. The analysis is our own, and where we have had to estimate we say so.
This edition of the Shift SME Economy Index captures the state of the SME economy as at June 2026. What follows below is our SME Economy Report: commentary on the underlying data, and a set of observations on the SME economy, and how it is financed, which differs from the picture often painted by market commentators.
SMEs are too important, and too poorly measured, to sit at the margins of the national conversation. We hope the Shift SME Economy Index brings the sector into sharper focus and helps stimulate the dialogue and attention it deserves.
Beneath the headlines
Underneath the headline numbers, there is clear dispersion in the SME economy across size and industry: small businesses are doing it toughest, and across industries there are clear winners and laggards. Yet the SME economy is more alike than not, with most businesses clustered around modest growth and thinner tails than expected at both extremes. That sameness leaves little cushion if conditions turn, and the latest months show early signs that they may be.
Australia’s SME economy is not a single industry but a cross-section of the whole economy. SMEs, businesses with less than 200 employees, would be the country’s largest industry by a wide margin, on both activity and employment, if counted as one.
Two measures, one reading of performance
Revenue and liquidity tell different parts of the story, and a business can be growing on one measure while under pressure on the other.
Revenue is holding up but declining
Liquidity is under pressure but improving
Over the last three months, revenue growth runs at around +5% (YoY) at the median, and it is widely shared, with most businesses growing rather than a handful of large ones carrying the average. Liquidity growth sits at around -5% (YoY).
In the Shift SME Economy Index, revenue and liquidity are two separate readings, each its own distribution, so they are best read side by side rather than averaged. Liquidity’s -5% median masks a wide spread, some businesses are drawing down cash sharply while others are stable or rebuilding it, a divide the next section breaks down in full.
EXHIBIT 1A: Revenue growth
EXHIBIT 1B: Liquidity growth
Revenue or Liquidity, in isolation, don’t tell the full story
This split divides businesses into four genuinely different groups based on their YoY movements: growing on both fronts, retreating on both, caught in a ‘squeeze’ where sales rise while cash tightens, or rebuilding cash while sales dip. A single average smooths over these differences and can mislead at the headline level.
EXHIBIT 2A: Revenue by Liquidity, June 2026
EXHIBIT 2B: Revenue by Liquidity, by size, June 2026
EXHIBIT 2C: Revenue by Liquidity, by state, June 2026
EXHIBIT 2D: Revenue by Liquidity, by industry, June 2026
The squeeze is a small business story
Business size sorts liquidity far more sharply than revenue. Taking a 3-month average of the YoY movements, median revenue shows a spread of approximately 5 points, small at 2%, established at 7%, corporate at 6%. Median liquidity shows a spread of approximately double, at 10 points, small at -10%, established at -1%, corporate at 0%. The smallest businesses are still growing sales, modestly, while materially drawing down their own cash to do it.
EXHIBIT 3A: Revenue by size
EXHIBIT 3B: Liquidity by size
Accommodation and Food Services under the most pressure, construction the clear leader
On a 3-month average, Construction leads at the Index level with revenue at +14% and positive liquidity, the only major industry holding its cash. Transport sits second behind Construction in terms of revenue growth. The rest cluster around modest revenue growth with mild cash pressure. Accommodation and Food Services is the clear laggard with revenue at -4% and liquidity at -16%, the weakest on both.
EXHIBIT 4A: Revenue by industry
EXHIBIT 4B: Liquidity by industry
A strength and an exposure
Splitting the SME economy by size, state and industry shows how differently populations are performing, and how closely most of them are moving. That pattern is what the next two sections examine.
SMEs: More alike than different
Plot the spread of growth across all businesses and the surprise is how thin the tails are. The story is the middle, where most SMEs cluster around modest growth. This cuts against the market narrative of an economy split between spectacular winners at one end and a raft of insolvencies at the other. Both happen. Neither defines the population.
Thin tails mean a degree of sameness. An SME distinguishes itself first by being an SME, and second by state or size. Cut the economy by state or by size and the distributions move largely in step, with little to tell one segment from another.
That sameness is both a strength and an exposure.
It is a strength because good policy transmits broadly. What helps one SME tends to help most of them, so a well-aimed measure has potential to reach the whole population rather than a favoured slice.
It is an exposure for the same reason. A varied economy absorbs a shock because some businesses outrun it. A uniform one has little idiosyncratic performance to cushion the group and few standout winners to offset the weak, so a downturn reaches most of the population at once.
Industry is the exception in the SME economy. Industries are more spread out and some move in different directions, construction still firming while hospitality and professional services soften, so the industry split carries a story of its own. But it is the only cut that does.
A signal worth watching
The Shift SME Economy Index peaked in April (+0.8) and has fallen over May and June. Liquidity’s 6-month recovery has shown signs of stalling in recent months. Revenue growth peaked in April and has started to soften, with all five states lower. This is only one or two months of data, so treat it as an early signal rather than a confirmed turn. But because SMEs move so closely in step with each other, a broad turn would spread quickly. Coming months will show how this plays out.
Growth needs credit
How SMEs respond to a turn like this depends partly on what credit is available to them, and that supply has a distinct shape of its own.
Sources and methods
The supporting data, references and methodology that sit behind the Shift SME Economy Index are available upon request.