Moderate growth of business credit for September quarter
Veda Quarterly Business Credit Demand Index: September 2015 Quarter
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Overall business credit applications rose 1.6% (vs September quarter 2014)
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Business loans (+1.8%) and asset finance applications (+6.7%) grew, trade credit weakened (-2.2%) (vs September quarter 2014)
- NSW's position as a strong economic performer evidenced in business credit growth
Sydney, Australia: 20 October 2015 – Released today the Veda Quarterly Business Credit Demand Index, measuring applications for business loans, trade credit and asset finance, grew moderately by 1.6% in the September 2015 quarter.
Asset finance applications grew (+6.7%), business loans grew (+1.8%), and trade credit declined (-2.2%) in the September quarter 2015 compared to the September quarter 2014.
The Veda Business Credit Demand Index has historically proven to be a lead indicator of how the overall economy is performing. Veda’s data continues to indicate moderate growth in credit demand for business, but showed a slight decline from the annual growth rate of +3.7% in the June quarter.
Veda’s General Manager, Commercial Risk and New Markets, Paul McFadden said: “With growth in the Australian economy remaining below trend, moderate business credit growth should be seen as a positive.”
Overall business credit applications eased in the September 2015 quarter (+1.6%). The softer conditions reflected across both mining and non-mining jurisdictions, however, non-mining states showed stronger demand for business credit. NSW (+5.9%) and Victoria (+2.5%) were the strongest states, followed by SA (+1.7%), ACT (+1.4%). Tasmania (-12.3%) was the only non-mining state to experience contraction. All mining jurisdictions experienced declining business credit applications for the September quarter 2015; Queensland fell by (-1.7%), WA (-4.5%) and NT (-10.7%).
Business loan applications eased in the September quarter to +1.8%. Of the non-mining jurisdictions NSW (+9.6%), Victoria (+2.3%), and the ACT (+2.1%) enjoyed strong growth in applications, while SA (-1.4%) and Tasmania (-15.4%) recorded a fall.
Business loan applications across the mining jurisdictions experienced drops across all states, with Queensland (-0.9%), having a modest drop, while WA (-11.1%) and the NT (-19.0%) dropped sharply in the September quarter.
Trade credit applications fell overall in the September quarter (-2.2%). Trade credit applications over the past year fell in NSW (-1.5%), Victoria (-2.8%), Queensland (-5.1%), Tasmania (-16.1%), the ACT (-4.8%) and the NT (-8.3%). SA (+5.5%), and WA (+1.4%) were the only two states to see growth in trade credit applications.
The easing of trade credit applications was largely driven by weakness in the main category of 30-day accounts (-4.2%), with applications for seven-day accounts (+3.3%) seeing a lift.
Asset finance applications picked up in the September quarter (+6.7%). This represented an improvement in the annual rate of growth for asset finance applications from 4.0% in the June quarter.
NSW (+10.7%), Victoria (+9.8%) and the ACT (+10.0%) saw strong growth in asset finance applications, followed by the NT (+2.8%), Queensland (+2.5%), SA (+1.3%) and Tasmania (+0.9%). WA (-3.4%) continues to see falls mirroring the downturn in mining-related construction work.
“Changes to accelerated depreciation rules for small businesses in May’s Federal Budget caused a spike in demand for asset finance for items under $20,000 in the June quarter. Demand for asset finance strengthened in the September quarter (+6.7%).
“While growth in national credit demand was moderate, NSW's position as a strong economic performer stood out in this quarter’s credit demand numbers. NSW led all states in overall business credit applications (+5.9%), business loan applications (+9.6%) and asset finance applications (+10.7%). NSW’s economy has been underpinned by growth in the construction and housing sectors, which have been performing strongly,” Mr McFadden said.
NOTE TO EDITORS
The Veda Quarterly Business Credit Demand Index measures the volume of credit applications that go through the Veda Commercial Bureau by credit providers such as financial institutions and major corporations in Australia. Based on this it is a good measure of intentions to acquire credit by businesses. This differs to other market measures published by the RBA/ABS, which measure new and cumulative dollar amounts that are actually approved by financial institutions.
DISCLAIMER
Purpose of Veda media releases:
Veda Indices releases are intended as a contemporary contribution to data and commentary in relation to credit activity in the Australian economy. The information in this release is general in nature, is not intended to provide guidance or commentary as to Veda’s financial position and does not constitute legal, accounting or other financial advice. To the extent permitted by law, Veda provides no representations, undertakings or warranties concerning the accuracy, completeness or up-to-date nature of the information provided, and specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.