Strength in Australia’s housing, business sectors drive strong credit growth in December

Australia’s credit growth came in strong in December, driven by housing and business sectors. Private credit stock in December recorded the biggest monthly rise since September 2015, which was mainly because of strength throughout both the business and housing sectors.

Housing credit continued to indicate a rebound in investor activity, possibly assisted by solid auction results and the recent acceleration in house prices, whereas rebound in business credit is underpinned by reports of improved business conditions at the end of 2016, noted ANZ in a research report.

Australia’s total private credit rose 0.7 percent sequentially and 5.6 percent year-on-year. Housing credit continued to grow at a stable rate, rising 0.5 percent on a sequential basis in the month and growing 6.3 percent year-on-year. Within the headline print, investor credit has been expanding at a more rapid rate than owner occupied credit for each of the last five months. It rose 0.8 percent sequentially, the fastest since May 2015. On a year-on-year basis, it rose 6.2 percent.

Owner occupied credit was up 0.4 percent on a sequential basis, and rose 6.4 percent year-on-year. Business credit also came in strong in the month, showing that the weakness witnessed through mid-2016 has passed. It rose 1.1 percent sequentially and 5.6 percent year-on-year.

The strong figure is consistent with the rise in business finance approvals in recent months that implies that business credit might continue to post moderate growth in months ahead. The sharp rebound in the business survey for December also augurs well for the business sector with trading conditions and profitability reportedly at multi-year highs, stated ANZ.

At 06:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at 9.0944, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -44.1711. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex