Australia private sector credit grows in November, in line with market expectations

Private sector credit in Australia grew during the month of November broadly in line with what markets had earlier anticipated. However, other personal credit (which includes credit cards and car loans) remains the major area of weakness in private sector credit. November was no exception.

Australia’s private sector credit grew by 0.5 percent in November. This pace is within the 0.4-0.5 percent monthly growth rate witnessed in the past five months. Annual credit growth edged up from 5.3 percent in October to 5.4 percent in November. The long-run average for annual credit growth is 6.1 percent, highlighting the sluggish nature of current credit growth in the economy, data released by the Reserve Bank of Australia (RBA) showed Friday.

The most encouraging piece of the data today was lending to the business sector. Credit growth to businesses rose by 0.5 percent in November, after a 0.5 percent rise in October. The past two months of data have shown a firm pick up in business credit, after a five-month period of only weak growth.

Diverging trends are starting to form in the housing credit data. Low interest rates have stimulated activity among property investors. Credit for investor housing grew at a blistering pace in November, but growth in lending to owner occupiers has moderated.

"Private sector growth was a mixed bag for the month of November. The Reserve Bank will take comfort from today’s figures on business credit. But the central bank is unlikely to be comfortable about the recent return of stronger growth rates in investor lending," St. George Economics said in its latest research report.

Meanwhile, AUD/USD traded at 0.72, up 0.10 percent, while at 4:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at 35.55 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex