Private Sector Credit — July | By the numbers
- Total private sector credit growth lifted by +0.4%m/m vs the market expectation for +0.3% (prior was +0.3%)
- Annual growth was +4.4%, unchanged from June after allowing for a downward revision from +4.5%
Private Sector Credit — July | The details
Looking across the categories the detail was;
- Housing; +0.4%m/m, +5.5%Y/Y (prior +0.3%, +5.6%)
- Owner-occupiers; +0.5%m/m, +7.6%Y/Y (prior +0.6%, +7.8%)
- Investors; +0.1%m/m, +1.5%Y/Y (prior -0.1%, +1.6%)
- Business; +0.5%m/m, +3.4%Y/Y (prior +0.3%, +3.2%)
- Personal; -0.1%m/m, -1.4%Y/Y (prior 0.0%, -1.3%)
Private Sector Credit — July | Insights
Total credit growth at the annual pace of +4.4% is the lowest since March 2014 — the prevailing RBA cash rate was 2.5%, but it has been 1 percentage point lower than this (at 1.5%) for 2-years now.
In the housing sector, annual growth eased further with softening from both owner-occupiers and investors, the latter now at just +1.5% — its lowest in the history of this series. These developments reference a cooling in residential property market conditions, tighter financing criteria — particularly for investors — following regulatory changes from APRA, while income growth remains persistently soft.
Annual credit growth from the business sector has been fairly volatile over the past year, averaging an annual pace of +3.7%. July's outcome (+3.4%) was slightly below this mark. Surveyed business conditions have been well above-average over recent quarters helped by rising profitability, while investment from the non-mining sectors has been improving — though, yesterday's Q2 CapEx data was less encouraging. Increased profitability has, perhaps, reduced the reliance on credit somewhat.
Personal credit remains out of favour and declined further in July and over the past year.