Australian business credit grew at its fastest pace in 15 months just as a survey showed the operating outlook for companies improved last month.
Business credit in December climbed 1.1% from the previous month, the sharpest increase since September 2015, according to data from Reserve Bank of Australia. That compares with a 0.6% growth recorded in November. Annual growth in the measure stood at 5.6% the quickest since August, the data showed.
Rising demand for business credit coincides with an improvement in operating conditions for Australian businesses, according to the National Australia’s Bank’s business confidence survey, which points to the likelihood of stronger economic conditions in the period ahead. Record low central bank rates are also spurring demand for loans with the Reserve Bank of Australia saying in December funding costs remained low for borrowers.
In seasonally adjusted terms, outstanding credit to businesses now stands at $880 billion, up from about $560 billion a decade earlier, according to the data.
NAB’s survey showed business conditions index jumped by 5 points to +11 in December, well above its long-run average of +5, suggesting that conditions haven’t been this good since the middle of 2016.
“The near-term outlook improved marginally in this month’s survey, with the forward orders index jumping above its long-run average level,” said Alan Oster, NAB’s chief economist.
“However, capacity utilisation rate, which are relevant to future employment and capital expenditure, eased back. The outcome for forward orders suggests good near-term prospects for activity, he said.