Australian businesses have continued to borrow strongly in recent months, despite escalating concerns about the effect the sub-prime crisis could have on the global economy.
New Reserve Bank of Australia data released today shows business credit grew by 1.4% in October 2007 and has grown by a startling 21.7% growth over the past 12 months.
The strong growth in business borrowing reflects the gap between share market perception – where fears about the US sub-prime fiasco have triggered serious volatility – and the continued growth of Australia’s real economy.
The lift in business borrowing was the single biggest contributor to an overall increase in private sector credit, which rose by 1.0%. Housing credit increased by 0.8% and personal credit by 0.6%.
Australia’s trade deficit increased by $522 million to $4.387 billion in the October 2007 quarter, but according to ANZ Economics, exports increased in volume terms by 2.3%.
While imports for the month increased by a similar rate, the net result is a 0.1% improvement on last month and suggests we may finally be starting to see some export results from the massive business investment that has taken place over the last year.
On the markets, at 1pm the S&P/ASX 200 is up 0.8% on yesterday’s close to 6497.5 and the Australian dollar is trading at US88.64c, up on yesterday’s US88.28c close.