The RBA has released June Credit Aggregates and it’s getting ugly. According to the bank:
Total credit provided to the private sector by financial intermediaries decreased by 0.1 per cent over June 2011, after rising by 0.3 per cent over May. Over the year to June, total credit rose by 2.7 per cent.
Housing credit increased by 0.3 per cent over June, following an increase of 0.5 per cent over May. Over the year to June, housing credit rose by 6.0 per cent.
Other personal credit declined by 0.4 per cent over June, after decreasing by 0.1 per cent over May. Over the year to June, other personal credit increased by 0.3 per cent.
Business credit declined by 0.7 per cent over June, after being flat in May. Over the year to June, business credit declined by 2.4 per cent.
Over the month of June, M3 declined by 0.5 per cent and broad money decreased by 0.6 per cent. Over the year to June, broad money grew by 6.8 per cent.
All growth rates for the financial aggregates are seasonally adjusted, and adjusted for the effects of breaks in the series as recorded in the footnotes to tables. Figures showing the levels of financial aggregates are not adjusted for series breaks. Historical levels and growth rates for the financial aggregates have been revised owing to the resubmission of data by some financial intermediaries, the re-estimation of seasonal factors and the incorporation of securitisation data.
So, private sector credit shrank in June. For me there are two really important charts that, coming on top of the RP Data – Rismark House Price data this morning, tells us the economy is into a negative feedback loop and a rate hike next week just might set the credit preconditions for a spiral.
Check out this chart. It is the month on month change in Housing Credit. This Month’s growth rate of 0.3% is the lowest since 1984!
The next chart below show the annual rate of growth in the stock of housing debt. It’s yet to go negative, so as Houses and Holes always says we are “dis-leveraging” but I’m guess we’ll see real genuine de-leveraging in the coming year.
Here is the chart of what the 4 RBA data series look like together year on year. All are trending down and the recent increased demand for business lending looks to have peaked – and why wouldn’t it? How’d want to leverage up in this economy.
As Sir Humphrey Appleby used to say – it will be a courageous decision for the RBA to raise rates next week after this data . Lets hope that the TD-MI inflation data Monday doesn’t give them renewed vigour to pull the trigger.