Despite the TD Securities/Melbourne Institute Inflation gauge showing another month of 4% inflation in March, the more interesting figures were the end of month credit numbers for February from the Reserve Bank.
These figures show a noticeable slowdown in activity: with housing, business lending and personal credit all falling in the month.
The news will interest the Reserve Bank as the board meets today to discuss monetary policy.
The discussion won’t see rates changed when the decision is announced at 2.30 pm.
The RBA said credit grew 0.7% in February, compared to 1.0% the previous month and market forecasts of 0.9% to 1.3% and a consensus of 1.1%. Over the year to February, total credit rose by 15.5%.
That was the slowest growth in credit for more than five years.
While personal credit fell 0.1% (down for the second month in a row, the first time that has happened in 15 years) for an annual growth rate of 10.8%, the slowest annual since November 2006, housing again eased: this time to an annual rate of 11.4%.
That continues the slow growth in housing loans that has been apparent since midway through last year. It’s a decade low pace in fact, which would indicate that the bank’s fears about a housing breakout could be unfounded.
The RBA split housing into owner occupied and investor housing for the first time (because it is more confident of the accuracy of the raw figures) and this showed an unchanged 1% growth in owner occupied housing for a 12% growth in the year to February, and a rise of 0.6% for investor housing for an annual growth rate of 10%.
The growth rate in owner-occupied housing is the lowest for years.
The figures were given some backing by March new home sales numbers from the Housing Industry Association.
Figures for March showed the sales of new homes and units dropped 5.3% among Australia’s largest residential builders and developers.
Detached house sales were 5% lower and multi-unit sales fell 7.5% and came after an 11.3% rise in new home sales across Australia in January.
HIA chief economist, Harley Dale said in a statement that Western Australia and Queensland led the downward trend after strong sales in the resources-boom states had pushed the figure higher the previous month.
"We saw a relatively big lift to sales in January thanks to a strong boost from the resource rich states," Mr Dale said.
"However, as suspected, this situation has proven to be unsustainable."
Finance for building new homes had been falling for some time and there was no sign of a rise in new home sales, or building approvals across Australia, Mr Dale said.
The RBA said that business lending, which had been booming slowed to an annual rate of 22.3% from 24.0% in January.
Much of the growth has been driven by so-called reintermediation with the credit crunch forcing businesses, especially large companies, back to their banks for money instead of raising it direct from the market via a manager.
Economists reckon that business lending was really running at around 20%, so the latest slowdown in February could see that growth rate ease even further.
The TD Securities-Melbourne Institute inflation gauge would force any change because it is telling us what the RBA has already acknowledged: that inflation in the March quarter will be 4% or better.
TD Securities said its survey’s headline inflation measure climbed by 0.4% in March to post an annual reading of 4% while the gauge’s underlying trimmed mean measure of inflation, which is used by the RBA, was up by 0.6% in March for an annual rate of 3.8%.
Financial services, fruit and vegetable, petrol and rental price rises were the biggest contributor to the March inflation gauge reading while these rises were offset by falls in the price of furniture, audio visual hardware, computers and telecommunications.
AAP says that all 19 economist surveyed last week said the RBA would leave rates on hold in April as it monitored the global credit crunch and the effects of recent rate rises.
