Business credit demand still falling
Bankers have been talking up a recovery in demand for business credit in recent presentations, but if there is a turnaround coming we will have to wait a while longer to see it.The value of new business lending flows from banks peaked in March 2010 and declined for each of the next five months, data from the Australian Bureau of Statistics published yesterday shows. In August, it fell two per cent to $28.2 billion, and is four per cent below the recent peak.The latest Veda Advantage business credit demand index shows that demand for business credit in the September quarter was down 5.7 on the same period last year.The survey has reported a fall in demand for two consecutive quarters. Business credit applications in the June quarter were down 5.6 per cent on the previous corresponding period.The index tracks credit inquiries on Veda's commercial database, predominantly from small- and medium-sized businesses. It is a measure of business credit application activity.As a measure of applications rather than settled loans the index is a forward indicator (although there is no measure of the time between application and approval). It suggests that business lending will remain subdued in the December quarter.