Credit lifts on the back of long-term low interest rates


PRIVATE-sector credit growth lifted by 0.5% in April and the annual pace of credit growth lifted to 4.6%. 

It was strongest annual growth rate in just over five years. 

The lift in the pace of credit growth has been helped by interest rates being low for an extended period of time. 

An encouraging aspect of the release is the gradual pickup evident in business credit. 

It grew by 0.3% in April and by 2.7% in the year, the strongest annual pace in over a year.

Share Markets: 

Global equities had a mixed session following a range of mixed economic data. In the US, the Dow and S&P500 rose to new record highs, closing 0.1% and 0.2% respectively higher.

The Nasdaq fell 0.1%.

This week, the key event for financial markets will be the ECB monetary policy meeting, where the ECB is widely tipped to provide stimulus measures.  


The lack of clear direction in sentiment saw US treasuries little changed. Yields on 10-year notes however, were marginally lower (yields higher), possibly in reaction to signs that US inflation headed higher.

Yields on Australian 3-year and 10-year notes both lifted 1 basis point to 2.78% and 3.66% respectively. 

Foreign Exchange: 

The US dollar index edged lower, consolidating ahead of the ECB meeting this week and the end of month. 

The Australian dollar was little changed, however, a raft of economic data will provide some event risk this week.

The RBA will meet on Tuesday and GDP Q1 data will be released on Wednesday.

Today, there were be building approvals, RP data-Rismark house prices, company profits along with some other lower tier data out today.


Most commodity prices fell including oil and gold prices. Copper prices also fell, but gained solidly for the month supported by strengthening demand from China.


Over the weekend, the manufacturing PMI rose from 50.4 to 50.8 in May. It was close to market expectations of 50.7 and further suggests that manufacturing activity picked up in May.

The HSBC measure released a few weeks ago similarly improved in May.


German retail sales fell 0.9% in April, versus expectations for a 0.2% gain. However, back revisions saw the annual rate lift to 3.4%.


Industrial production eased back while inflation, outside of tax changes, moderated. 

The national CPI rose by 3.2% in the year to April, but grew at a more modest rate of 1.5% when the impact of the increase of the consumption tax was excluded. 

From the more closely watched Tokyo CPI, which is seen as the leading indicator of the national CPI, the core measure rose 1.9% in the year to May and by 0.4% over the same time period excluding the tax changes. 

Most notably, consumer durables, which had been making a positive contribution to inflation, turned negative in May. 

The Japanese economy has slowed recently with industrial production reported to have declined 2.5% in April while household expenditure is down 4.6% in the year to April, a much larger than expected fall following the 7.2% gain in March. 

The jobless rate stayed steady at 3.6% in April.

New Zealand: 

Building permits lifted by 1.5% in April, after a 9.2% bounce in March. 

The number of approvals is the second highest in at least four years and the numbers were buoyed by strength in apartments.

United Kingdom:

GfK consumer confidence improved from -3 to 0 in May, the highest reading in more than nine years.

United States:

Personal spending fell 0.1% in April, the first fall in two months.

However, it followed a solid 1.0% gain in March, which was previously reported to be 0.9%.

The improvement in the labour market over recent months further allays some concern about the outlook for consumer spending.

Personal income rose 0.3% in April, in line with expectations, although given inflation, according to the PCE deflator, was running at 0.2% in April, the pace of real incomes remained subdued at around 0.1% in the month. Inflation on this measure lifted from 1.1% in the year to March, to 1.6% in the year to April.

Although inflation at this level it shouldn't be a big issue for the Fed, a further lift in inflation will add to expectations that a Fed rate hike will be on the agenda soon.

According to the University of Michigan measure, consumer confidence was revised slightly upwards in the final estimate for May to 81.9 from 81.8 previously, but was still down from the April reading of 84.1.

In other data, the Chicago purchasing manager's index rose from 63.0 to 65.5 in May, the highest in seven months and providing a positive signal on manufacturing activity in the Chicago area.

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