Business lending tumbles in August

by Julia Corderoy14 Oct 2014
Business lending has suffered a knock-back in August, according to official figures released yesterday.

According to data released by the Australian Bureau of Statistics, commercial finance lending dropped 16.3% during the month, after rising 3.4% in July – down from $47.9 billion to $40.1 billion.

The data revealed that fixed lending commitments fell 18.3% after a rise of 21% in July, while revolving credit commitments fell 9.6% following a fall of 26.8% in July.

Per Amundsen, director of leading commercial property lender Thinktank, said the large difference between the trend estimates and seasonally adjusted estimates may suggest volatility in the data. The trend estimate reported by the ABS was a rise of 0.2% while the seasonally adjusted estimate was a decline of 16.3%.

“My first reaction [to the data] is to question the volatility in the seasonally adjusted figures and look to the trend which is virtually unchanged,” he told Australian Broker.

“Given what has happened recently with the Labour Force data and the queries that arose over the last few months of pretty wild swings, I wouldn’t be all that surprised if something similar has happened to this series as well.”

Amundsen said Thinktank hasn’t experienced any noticeable trends in demand for commercial property finance.

“I can say that we have seen no change month over month to demand for commercial finance bearing in mind our lending is strictly for commercial property. On a trend basis the increase year over year is steady as well both on a monthly and quarterly basis,” he added.

Savanth Sebastian, economist for CommSec, says that the August data may be an anomaly given the current business environment.

“However, given that the business environment continues to improve, it is likely that the slide is just one month’s aberration and likely to reverse course in coming months. In fact prior to this result commercial lending was up a staggering 50% on a year ago – it is now up a more sedate 12%.”