SMB expansion regains momentum as hiring rebounds in May

SYDNEY, AUSTRALIA, June 2026 – Australia’s small and medium business (SMB) sector regained its footing in May, with Employment Hero data revealing a rebound in business expansion following a brief slowdown in April.

The latest Employment Hero Jobs Report data found business expansion increased 1.1% MOM in May, recovering from April’s slight decline of -0.1%, signalling continued resilience across Australia’s SMB sector.

At the same time, casual work continued to surge, with casual employment growing 10.8% YOY,  more than double the growth rate of full-time employment (5.2%) and significantly ahead of part-time employment (2.7%).

The latest release, based on aggregated payroll data from more than 23,000 businesses and 1.7 million employees, points to a resilient SMB sector that is still managing to expand despite  challenging economic conditions. 

Rather than pulling back on hiring altogether, employers appear to be taking a more measured approach to growth – balancing workforce expansion with sustained cost pressures and broader uncertainty. 

Employment Hero APAC Managing Director James Keene said the scale of the dataset reinforces the strength across a large cross-section of Australian businesses. 

“SMBs are experiencing a more nuanced operating environment where hiring continues – albeit more strategic hiring,” Keene said.

“Following a softer result in April, it’s encouraging to see SMBs return to growth in May, demonstrating the resilience that continues to underpin Australia’s small business sector.

“While economic headwinds remain a defining feature of the current environment, they are not yet stalling SMB expansion. The data shows that businesses are adapting. They are growing where possible, controlling costs where necessary, and continuing to invest in workforce capacity in a targeted way to support business objectives. 

“The continued strength in casual employment shows businesses value flexibility as they navigate changing economic conditions, while still maintaining access to the talent they need.”

Despite the positive employment result, wage growth softened in May. Wages fell -1.6% MOM, reversing April’s gains and bringing annual wage growth to 4.5% YOY, down from 4.8% the previous month.

Although wages are still growing faster than inflation, May saw annual wage growth fall to a 10-month low.

Keene said the easing in wages suggests businesses are becoming more measured in how they manage labour costs.

“Businesses are still grappling with rising operating costs and broader economic uncertainty, so a moderation in wage growth after a sustained period of increases is unsurprising.”

“While overall wage growth remains solid, many employers are now focused on lifting productivity and efficiency alongside headcount growth. Increasingly, technology and AI are enabling businesses to do more with existing resources while continuing to invest in their workforce.”

Employment Hero’s monthly Jobs Report provides a real-time snapshot of labour market conditions using first-party payroll and employment data from businesses across Australia.