Australia’s credit growth likely grew steadily in February

Australia’s two-thirds of private sector credit is housing related. Given that this sector is important for the credit’s overall evolution. Weekend house auctions have been stronger, implying that housing market activity is performing well.

Therefore, the overall housing-related demand for credit is likely to have bolstered slightly in February, according to Societe Generale. The housing-investor segments and owner-occupier segments both are expected to have been more dynamic than seen in January and December on monthly basis.

In February, demand for credit from business, which is the most volatile component, is likely to have expanded steadily at the rate of 0.6% m/m, added Societe Generale. This shows a slow rebound in non-resource investment activity, although not matching solid growth witnessed in Q3 2015.

“Credit growth at 6.5% yoy would continue to run well ahead of nominal GDP (2.4% yoy in Q4) and nominal household disposable income growth (3.1% yoy in Q4), suggesting that from a credit-growth perspective, monetary policy is sufficiently expansionary”, says Societe Generale.