The outlook for the economy has been clouded by the big fall in consumer confidence since the release of the Budget. But data released by the RBA this morning confirms that economic momentum was gaining speed in April.
RBA data on financial aggregates showed that total credit grew 0.5% in April (versus 0.4% expected) for a year ended rise of 4.4%.
Individually housing credit continues to recover accelerating to a 6.1% year to growth rate and even business lending was starting to pick up in April rising 0.3% with a 12 month growth rate of 2.7% up from 1.4% the month before.
Taking a deep dive into housing credit it is clear that investor housing is outpacing owner occupier demand but as Cameron Kusher, Senior Research Analyst at RP Data, just highlighted on twitter it is “pretty rare for owner occupier credit growth to outpace investor” demand.
Key to the data is that it highlights that low rates are working and although there is likely to be a flat spot in growth, as a result of the Budget’s impact on consumer sentiment, this is a sign that perhaps the underlying momentum in the economy will win out in the end.
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