Credit growth remains subdued

The RBA has just released its Financial Aggregates for May. It is more of the same with credit growth remaining subdued, with housing credit growing at the slowest rate in 35 years of current data and at a three month annualised pace of just 5.2%.

Below is a summary of the RBA’s release with charts of the key data.

May 2011

Release date: 30 June 2011

Total credit provided to the private sector by financial intermediaries rose by 0.3 per cent over May 2011, after being flat in April. Over the year to May, total credit rose by 3.1 per cent.

Housing credit increased by 0.5 per cent over May, following an increase of 0.4 per cent over April. Over the year to May, housing credit rose by 6.2 per cent.

Other personal credit was flat over May, after falling by 0.3 per cent over April. Over the year to May, other personal credit increased by 0.8 per cent.

Business credit rose by 0.1 per cent over May, after falling by 0.5 per cent over April. Over the year to May, business credit declined by 1.5 per cent.

Over the month of May, M3 rose by 0.9 per cent and broad money increased by 0.9 per cent. Over the year to May, broad money grew by 8.4 per cent.

All growth rates for the financial aggregates are seasonally adjusted, and adjusted for the effects of breaks in the series as recorded in the footnotes to tables. Figures showing the levels of financial aggregates are not adjusted for series breaks. Historical levels and growth rates for the financial aggregates have been revised owing to the resubmission of data by some financial intermediaries, the re-estimation of seasonal factors and the incorporation of securitisation data.

Further details are shown in the following tables:

Growth in Selected Financial Aggregates – D1 [XLS]
Lending and Credit Aggregates – D2 [XLS]
Monetary Aggregates – D3 [XLS]

Unconventional Economist
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  1. This 30-minute clip is brilliant (and hilarious) on many levels:

    It conveys:

    1. Predatory sub prime lending practices
    2. Moral hazard
    3. The Fed Reserve and the creation of money
    4. The history of money
    5. The current financial situation
    6. And the solution

  2. Market is LOVING this news – all banks up sharply on it.

    6% annual growth in mortgage lending to the bulls is awesome.

    It “proves” their theory that the banks are just fine – and on the back of a Greek bailout (where some of our banks are very lightly exposed, but moreover stand to gain from a “reduction” in banking risk in EU) this has provided a big kick up the pants of the four banks…

      • Torchwood1979

        6.2% YOY growth of roughly $1.2 trillion worth of debt means house prices fall slowly in nominal terms.

        There are three facts in that statement:
        1. Growth is at 6.25 YOY
        2. Australia’s mortgage debt is over $1.2 trillion
        3. In nominal terms house prices are falling nationwide, but slowly

        Leave out or play down 2 and 3 and it’s easy to spin this as Great News.

    • Keen’s modelling of the credit impulse (and Data Sword’s showing correlation of quarterly change in ABS home prices vs housing finance number’s ex-refinancing) is the elephant in the room.

      Currently listening to Wayne Swan talk about the economy, and private (and State government) debt is not even mentioned – does any mainstream economist or anyone at Treasury look at private debt?

      Or are they as blind as their American cousins?

      • does any mainstream economist or anyone at Treasury look at private debt?

        No, because they have been taught that its a non-issue. The financial crisis was caused solely by government interference in the mortgage market. It had nothing to do with easy monetary policy, gung-ho mortgage brokers, securitisation, synthetic CDOs, and all the other stuff Wall St bankers invented.

        That’s what they believe anyway…

  3. Along with falling house prices and fewer job vacancies, Gotti is particularly gloomy today:

    Any lingering thoughts Reserve Bank directors might have harboured to lift interest rates next week will have been wiped out by the disturbing Sensis Business Index released this morning.

    And, given the gathering intensity of the non-mining downturn – vast areas of Australia are in recession – prudent Reserve Bank directors should have rate rises off the agenda in coming months, unless for some reason there is a huge spike in inflation. It’s time to start thinking about interest rate reductions.


    But hey, Greece has been “fixed” so its off to the races again!

    • FYI the 3-month annualised pace of housing credit growth is actually 5.05%. While the D01hist.xls colums display to 1 decimal place, the values in the cells have more decimal places. e.g. Housing credit grew 0.465216309154948% in May, or 0.5% as displayed and reported in the media.

      Now off to get my internet pedantry scout badge…

  4. “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved”(Ludwig Von Mises)

  5. I’m going to go against the grain of this website and say this is one for the bullhawks. *If it continues* like this next month, then interest rates will be going UP in August.