The last few days have seen some low impact, but nonetheless enlightening, data hit the screens.
Credit growth remains solid, with a 0.4 per cent gain in March which meant the annual growth rate was 4.4 per cent. Not weak, not strong but the annual increase was the fastest since March 2009. Housing credit drove the lift in growth with a 5.9 per cent annual increase while business credit was also on the mend with an annual rise of 2.6 per cent. It seems borrowers and lenders are stepping up to take advantage of the current low level of interest rates and stronger growth more broadly.
The terms of trade (export prices divided by import prices) were broadly stable in the March quarter (up 0.4 per cent) with export prices rising to their highest level since December 2011. The curious thing – at least for the terms of trade doomsayers – is that since the end of 2012, the terms of trade have actually risen by 1.4 per cent, aided by a stronger world economy.
While the terms of trade may yet collapse, there is scant evidence of this at the moment.
The RPData house price series locked in the stellar house price momentum of the past two years – price rose a further 0.3 per cent in April for an annual rise of 11.7 per cent. While the April rise seems reasonably well contained, it follows a record monthly rise of 2.3 per cent In March. There seems little doubt that house price growth remains particularly strong.
The otherwise unremarkable AIG Performance of Manufacturing Index fell 3.1 points to 44.8 points. This reflects a mix of long run structural issues for manufacturing where low cost overseas competitors are likely to continue to negatively impact Australian business and related to that the difficult being imposed from the Australian dollar at current levels.
The net result of all of this information is that the economy is growing solidly and is likely to continue to do so for some time, or at least while ever the RBA holds interest rates at record lows.