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Andrew Hanlan, analyst at Westpac, notes that Australia’s credit growth was anaemic in mid-2019, with housing weak in the wake of the sharp downturn and with business hitting a soft spot around the time of the Federal election.

Key Quotes

“Total credit grew by 0.2% in the month of July. This follows gains averaging 0.14% for the period April to June. The 3 month annualised pace of credit growth is currently only 1.8%.”

“In July, the mix of credit was: housing +0.26%; business 0.2%; and personal -0.4%.”

“Annual credit growth has moderated to 3.3% currently, the slowest pace since 2013. Credit growth has progressively eased since expanding by 6.6% in 2015, with growth moderating to 5.6% in 2016, +4.8% in 2017 and +4.3% in 2018.”

“Key to this trend has been the housing sector. Housing credit growth has moved lower over recent years: from 7.4% in 2015; 6.3% in both 2016 and 2017; to 4.7% in 2018. The latest annual reading is 3.3%, the weakest in the history of the series (dating from the late 1970s) – the previous cyclical low was 4.4% in early 2013.”

“In 2019, business credit has hit a soft spot, with growth slowing to 1.5% annualised over the past 3 months. Key was the impact of additional uncertainty around the time of the May Federal election. This mirrors the experience of the July 2016 Federal election. With the election now behind us, lending will potentially rebound.”