Lending eases: Total lending finance fell by 1.9 per cent in November – the third fall in four months. Total lending in November stood at a 12-month low of $64.8 billion, up just 1.2 per cent on a year ago.
Job vacancies: Job vacancies rose by 2.6 per cent to a 2-year high of 150,400 in the three months to November. Job vacancies are up 8.0 per cent on a year ago.
What does it all mean?
The latest economic data contains a mixture of good news and less positive news. The good news is that businesses are looking to hire staff, backing up the positive trend in the monthly job advertisements series. The less positive news is that Aussie consumers and businesses are still cautious about borrowing with new lending commitments by financiers at a 12-month low. Lending is still higher than a year ago, but the rate of growth has slipped markedly.
Hopefully the fall in petrol prices will boost business revenues and profits, leading to higher spending, investing and hiring. Certainly there is already evidence that businesses are looking to take on more staff.
With businesses hiring staff again, the Reserve Bank will be content to leave cash rates at their current 59-year lows.
What do the figures show?
Lending Finance:
Total new lending commitments (housing, personal, commercial and lease finance) fell by 1.9 per cent in November – the third fall in four months. Total lending stood at $64.8 billion, up 1.2 per cent on a year ago.
Housing finance: The seasonally adjusted measure of construction and new purchases fell by 0.2 per cent in November while alterations & additions rose by 4.2 per cent. Home loans are up 3.9 per cent on a year.
Commercial finance: The seasonally adjusted series for the value of total commercial finance commitments fell by 2.6 per cent in November after falling by 2.2 per cent in October. Revolving credit commitments rose by 3.8 per cent while fixed lending commitments fell by 4.6 per cent. Business loans are down 1.1 per cent over the year – the first annual decline in 20 months.
Personal finance: The seasonally adjusted series for the value of total personal finance commitments fell by 2.2 per cent in November after rising by 6.3 per cent in October. Revolving credit commitments fell by 3.1 per cent and fixed lending commitments fell by 1.4 per cent. Personal loans are up 6.7 per cent over the year.
Within personal fixed finance commitments all lending categories were lower than a year ago except debt consolidation (up 11.3 per cent) and “other” loans (up 8.4 per cent). Debt consolidation and refinancing account for 43.6 per cent of all loans.
Lease finance: Lending fell by 4.4 per cent in November to be up 0.1 per cent over the year.
Job vacancies:
Job vacancies rose by 2.6 per cent to a 2-year high of 150,400 in the three months to November.
Over the past year job vacancies rose by 11,500 or 8.2 per cent in original terms. Over the past year vacancies rose most in Professional, Scientific and Technical Services (up 4,100) and Manufacturing (up 3,500). Vacancies fell most in Accommodation, Cafes and Restaurants (down 2,800), Transport and Storage and Property and Business Services (both down 1,200).
Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.
With consumers and businesses still reluctant to borrow, banks and other financiers will continue to compete strongly for available business. The dominant reason for consumers to take out new loans is to refinance or consolidate existing loans.
A stronger job market and lower petrol prices support the outlook for consumer-focussed companies.
CommSec expects the Reserve Bank to keep interest rates on hold over 2015. If near record lows for interest rates can’t induce businesses to borrow, it is unlikely that lower rates would do much better.
What is the importance of the economic data?
Lending Finance is released monthly by the Bureau of Statistics and contains figures on new housing, personal, commercial and lease finance commitments. The importance of the data lies in what it reveals about the appropriateness of interest rate settings, confidence and spending levels in the economy.
The Australian Bureau of Statistics releases Job Vacancies data each quarter. The data is useful in gauging the strength of the job market.
What are the implications for interest rates and investors?
With consumers and businesses still reluctant to borrow, banks and other financiers will continue to compete strongly for available business. The dominant reason for consumers to take out new loans is to refinance or consolidate existing loans.
A stronger job market and lower petrol prices support the outlook for consumer-focussed companies.
CommSec expects the Reserve Bank to keep interest rates on hold over 2015. If near record lows for interest rates can’t induce businesses to borrow, it is unlikely that lower rates would do much better.
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