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Andrew Hanlan, Research Analyst at Westpac, notes that in June, Australia’s credit to the private sector grew by 0.3%, following a rise of only 0.2% in May, representing a slowdown from an average monthly gain of 0.4% over the previous 10 months, extending back to mid-2017.

Key Quotes

“Annual credit growth is now 4.5%, moderating from 4.8% for 2017, 5.6% in 2016 and a 6.6% expansion in 2015. The June outcome is the slowest annual pace since March 2014 – at that time the RBA cash rate was 2.50%, 1.0 percentage point above the current level.”

“Housing credit grew by 0.34% in June, the softest monthly outcome since the end of 2012. Annual growth is 5.6%, down from 6.3% for both 2016 and 2017, and well below the 2015 outcome of 7.4%.”

“Momentum in housing credit, as measured by 3 month annualised growth, has slowed progressively from a peak of 6.8% in March 2017 to be 4.6% currently. The June figure itself is a 4.2% annulised pace.”

“Fundamentals point to some further slowing in housing credit.”

“Turning to business credit, this is volatile around a modest uptrend. Annual growth is 3.2% currently, in line with the 3.1% outcome for 2017, but a moderation from the three previous years, when annual growth averaged 5.6%.”

“In June, business credit advanced by 0.3%, continuing the volatile pattern of late, with outcomes ranging between -0.1 and +0.7% over the previous half year.”