An extended contraction in lending to Australian business deepened in September, adding to concerns about the health of the sector and arguing for the Reserve Bank to approach raising interest rates cautiously.
Business credit fell by a seasonally-adjusted 1.3% in September from August, the eighth consecutive monthly decline, and its biggest one-month fall since December 2008, according to data provided by the RBA Friday.
Total credit provided to the private sector fell 0.2% in September, its first decline since December 2008.Economists said the accelerated drop in business credit reflects deleveraging by businesses in response to the weak global economic back drop.
Personal credit also weakened in September by 0.2% as the impact of economic stimulus measures put in place at the start of the year, continue to fade.
Housing credit remained the only area of strength, rising a solid 0.7% in September, the RBA said.