Shift SME Economy Index. First edition. Data to 30 September 2026.

The September result confirms that conditions for SMEs remained soft through the quarter. The pace of decline has moderated after a sharp slowdown in the first half of 2026, and the Index has not fallen below its May low since. Readings between 49 and 51 are within the normal ebb and flow of business conditions. The slowdown came amid a series of shocks: the reversal of the 2025 interest rate cuts, higher energy costs after war broke out in the Middle East, and weaker established housing markets.

The slowdown is not landing evenly. Smaller businesses are bearing the brunt, while Corporate businesses have held up. NSW has held up despite house price falls in Sydney and has shown tentative signs of rising momentum. Western Australia’s fall follows three years of strong performance, so it is a large fall from a high base. Among industries, Manufacturing has been surprisingly resilient, while Retail and Construction have slowed without a major deterioration.

Official data shows consumer spending has been resilient. With underlying inflation rising, the RBA raised the cash rate in late September for the fourth time this year, and its effects are not yet in the Index. The Index suggests a softer picture, with spending possibly weaker than the Household Spending Indicator shows (see methodology). Business investment outside the technology sector has also softened, and the Index is likely to be capturing this.

Shift’s liquidity data gives a timely measure of SME cash holdings across its customer base. Its history is short, but it shows a common pattern across business sizes and industries. Cash holdings rose strongly in the final stages of the pandemic, most likely reflecting the government support programs introduced during lockdowns, and have declined since.

The AI spending figures show how quickly SMEs are taking up AI tools, and how much Anthropic’s share of that spending has grown in 2026. The rise in spending with OpenAI in September may reflect the release of GPT-6 Astra on 3 September.

The Shift SME Economy Index and its sub-components are cyclical measures of business revenue across Australia’s SME community. While based on aggregated customer data, the Index is presented in a net balance format, reflecting momentum in sales revenue. The Shift SME Economy Index is anchored to a reading of 50. A reading above or below means more or fewer SMEs than usual are growing. Because the Index measures momentum rather than the level of activity, a reading below 50 does not mean total revenue is necessarily falling. Readings between 49 and 51 reflect ‘average’ business activity conditions with readings above 51 could be considered strong whilst readings below 49 considered soft.