Australia’s private sector credit likely to have grown fractionally in sequential terms in October

Australia’s private sector credit demand has not received much of a boost from the two 25 basis points rate cut by the RBA in the months of May and August. However, there has been a modest rebound in loan growth to housing investors and this is expected to have continued in October. Nevertheless, with loan growth to owner-occupiers stable on a sequential basis and still decelerating on a year-on-year basis, the overall housing credit is likely to have remained stable at 6.4 percent, according to a Societe Generale research report.

This is a decline from an average of 7.3 percent in 2015 and 7 percent in the first half of 2016. On a credit to business front, there has been quite little growth since the brief sharp rise from the mid-2015 to April 2016. The average monthly annualized growth in the five months to September was just 1.5 percent.

Even if slightly stronger growth is anticipated in October, the annual pace is expected to have remained slow. In all, private sector credit is likely to have grown just fractionally to 0.5 percent in sequential terms from 0.4 percent. However, on a year-on-year basis, it is expected to have slowed from 5.4 percent to 5.2 percent, the weakest in over two years, added Societe Generale.

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