Andrew Hanlan, Research Analyst at Westpac, notes that Australia’s credit growth has been slowing as the housing sector cools in response to tighter lending conditions.
Key Quotes
“In July, credit grew by 0.4%, an improvement on the past two months – an increase of only 0.2% in May and a rise of 0.3% in June.”
“Housing credit was, at the margin, a little firmer in July, increasing by 0.39%, up from outcomes of 0.37% and 0.35% over the past two months.”
“Business credit remains volatile, posting a 0.5% gain in July, the strongest outcome since a 0.7% in March and a 0.7% last November. The average for the other six months over this period is just 0.1%.”
“This better outcome for total credit is likely to be a temporary respite from the current slowdown.”
“Annual credit growth is now 4.4%, moderating from 4.8% for 2017, 5.6% in 2016 and a 6.6% expansion in 2015. The current annual pace is the slowest since March 2014 – at that time the RBA cash rate was 2.50%, 1.0 percentage point above the current level.”
“In 2017, the business mood improved, mirroring the global trend. This has translated into an increase in business investment in the real economy by the non-mining sectors.”
“Currently, business credit growth is undershooting growth in non-mining business investment, the reverse of the experience in recent years, suggesting a greater reliance by businesses on internal funds.”
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