SMB Hiring Rebounds as Employers Prioritise Staff Retention

• Australian SMBs showed resilience in September with a strong +0.8% MoM rebound in employment growth – the highest monthly gain since May.
• Casual employment led headcount growth (+1.0% MoM, +9.7% YoY), while every state except the Northern Territory recorded positive monthly hiring momentum.

Annual wage growth slowed to 2.2% YoY (down from 4.5% YoY in August), indicating a potential shift in how SMBs manage cost pressures, where employers may be prioritising headcount stability and job security alongside pay moderation.

SYDNEY, AUSTRALIA, 9 October 2026 – Australia’s small and medium-sized business (SMB) sector demonstrated strong resilience in September, with hiring bouncing back sharply as business leaders focus on hiring and strengthening operations.

The latest Employment Hero Jobs Report reveals a positive uptick in national SMB headcount, with employment expanding 0.8% month-on-month (MoM) in September, marking the strongest single-month hiring gain since May. Hiring was widespread, with headcount increasing across seven out of eight states and territories, and in 12 out of 13 major industries.

However, coinciding with the stable hiring is a sharp slowdown in pay. The median hourly rate dropped in September by 2.3 percentage points to 2.2% year-on-year (YoY), pulled down by a -1.8% drop month-on-month. September’s result compresses what was previously a gradual nine-month slide into one steep step down. While this reflects a challenging reality for workers navigating living costs, it points to a broader softening in payroll growth, a shift likely driven by a combination of tighter economic conditions, shifting workforce composition and employers managing overall payroll expenses to maintain existing headcount.

Employment momentum was solid across all worker categories, contributed to by casual employment (+1.0% MoM and +9.7% YoY), which continues to offer businesses vital operational agility. On a regional level, Western Australia (+1.0% MoM), the ACT (+0.8% MoM), and New South Wales (+0.8% MoM) led monthly hiring gains, while Agriculture, Mining & Energy (+2.2% MoM) and Administration & Office Support (+1.6% MoM) led sector expansion.

Employment Hero APAC Managing Director James Keene said the September data shows Australian SMBs taking a proactive, retention-first approach to workforce planning.

“When I speak with small business leaders across the country, the message is consistent: nobody wants to let good people go,” Keene said.

“In September, we saw a notable hiring gain of 0.8% month-on-month, a welcome lift after three months of virtually flat headcount. But looking at the bigger picture, one good month doesn’t reverse the trend. The quarterly read shows that overall hiring momentum has been gently easing since March.

“Holding onto those teams in a tight economic climate comes with clear trade-offs, which is why September saw such a drop-off in wage growth. This single sharp drop accelerates a gradual cooling pattern we’ve observed all year. Business owners are telling us that after months of absorbing higher overheads, something had to give, and right now, protecting job security is taking priority over pay increases.

“To navigate this, business leaders are relying more heavily on technology and AI to lift day-to-day productivity. It’s helping existing teams accomplish more without forcing owners to choose between overextending on overheads or cutting staff.”

Younger Australians remain a key engine of workforce growth. Employees aged 18–24 recorded the highest monthly headcount increase (+1.3% MoM) and continue to outperform all other cohorts in annual wage growth at 7.0% YoY.

Employment Hero’s monthly Jobs Report provides a real-time snapshot of labour market conditions using aggregated, anonymised first-party payroll data from more than 23,000 businesses and 1.7 million employees across Australia.