VEDA: Budget hit Q2 business credit

From VEDA today:

The Veda Quarterly Business Credit Demand Index, measuring applications for business loans, trade credit and asset finance expanded 0.5% in the June quarter 2014.

This increase is reflected in a drop in asset finance (-4.9%), offset by a small increase in trade credit applications (+0.3%) and a rise in business loans (+4.9%).

Overall business credit applications declined across the mining states but grew in the non-mining states during the year to the June quarter. The mining states (WA, Queensland and NT) experienced an easing in business credit demand (- 0.9%). Business credit applications in the non-mining states grew at an annual rate of 1.2% in the June quarter, deteriorating from an annual growth rate of 3.5% recorded in the March quarter 2014.

The best performing states were SA (+1.9%), NSW (+1.6%), Queensland (+1.1%), Victoria (+0.9%) and the ACT (+0.9%). Falls were recorded in Tasmania (-5.8%), WA (-4.6%) and the NT (-1.5%)

Despite an easing nationally of business loan applications to +4.9%, stronger growth was seen in the eastern states including NSW (+5.2%), Victoria (+7.9%) and Queensland (+7.2%) as well as in SA (+7.7%), and the NT (+9.1%). A decline was recorded in WA (-5.9%), Tasmania (-4.6%) and the ACT (-4.7%).

Within business loans, the strength recorded earlier in the year for commercial mortgage applications eased (+3.3%), and applications for lending proposals (+13.6%) and overdrafts (+31.2%) lifted strongly.

Trade credit applications (+0.3%) softened in the June quarter. Falls in trade credit applications were reported in Victoria (-2.3%), followed by the NT (-2%).Tasmania and WA were flat (0%). Growth was seen in NSW (+0.5%), Queensland (+2%), SA (+3.5%), and the ACT (+6.2%).

“The new Federal Budget issued this June quarter may have stifled business confidence, impacting the level of SME activity in the market,” said Mr Samaha.