- Overall business credit growth increased by +0.9%, slight rise from -0.7% in September quarter
- Asset finance enquiries fall by -5%, second consecutive quarter of reduced demand
- Western Australia data shows mining slowdown continues to bite as demand for business loans, asset finance and trade credit contracts
Veda revealed the results of its business credit demand index for the fourth calendar quarter of 2013. The index, which measures the change in credit demand for the December quarter compared to the same period in 2012, showed that overall business credit demand rose by +0.9% over the past year, and increased marginally from -0.7% in the September quarter.
The modest rise in overall business credit enquiries reflects an increase in business loans (+5.2%), a small rise in trade credit (+1.2%), and a fall in asset finance enquiries (-5.0%). Growth in business credit enquiries across the non-mining states picked up slightly to +1.7% in the December quarter, up from -0.1% in the previous quarter. Business credit enquiries in the mining states of WA, QLD and NT were more subdued, demonstrating a contraction of -0.6% in the December quarter, up from -2.1% in September. Weakness in business credit is now clearly showing in WA, where business credit applications fell by -5.2% over the past year.
“The latest data suggests that demand for credit remains flat, with the downturn in Australia’s resources sector and generally weak business conditions taking their toll on businesses confidence, despite low interest rates, clarity on the Federal government and a lower Australian dollar,” said Moses Samaha, general manager of commercial credit risk at Veda.
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About: The business credit demand index measures the volume of credit enquiries 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.