Mixed signals on business lending

New business lending is picking up but business loan balances are static, according to the latest figures.

Australian Bureau of Statistics lending figures released on Friday show that new commercial finance commitments rose four per cent in April, compared with the previous month (in seasonally adjusted terms).

New commercial finance commitments in April were worth A$46.5 billion - the highest amount since July last year.

The strong growth in new business lending in April follows the 0.4 per cent growth in the value of new commercial finance commitments in March.

While the rate of new lending growth has picked over the past few months, Reserve Bank figures show that business loan balances are static. According to the RBA, lenders' business loan balances were unchanged in April.

This suggests that businesses are refinancing but not taking on new debt.

This is consistent with data showing weaker conditions in the debtor finance market and falling business investment in the March quarter.

The Debtor and Invoice Finance Association reported that sector turnover in the March quarter was A$15.3 billion - down 11 per cent from turnover of $17.2 billion in the December quarter. Turnover was 1.9 per cent higher than the same quarter last year.

Australian Bureau of Statistics figures released last month showed a 4.4 per cent fall in business capital expenditure in the March quarter. The ABS also reported that businesses expect to invest 25 per cent less in the coming financial year than they have in the current year.