NZ: Q1 Private sector credit (PSC) growth accelerated to 1.6% - ANZ

Miles Workman, senior economist at ANZ, notes that the New Zealand’s private sector credit (PSC) growth accelerated to 1.6% q/q in Q1 from 1.1% in Q4, while annual growth of 5.7% y/y also ticked up (from 5.1% in Q4).

Key Quotes

“As a result, we estimate that the outstanding stock of credit nudged a little higher to 155.3% of GDP.”

“Businesses lending accelerated in the quarter, up 2.1% q/q (sa) to be up 5.9% y/y. But as always, it is difficult to disentangle credit for investment versus working capital. While annual growth remains on the softer side compared to growth around 7% recorded over 2017, there is some evidence of a recovery from weak growth late last year.”

“Agricultural credit growth remains subdued, but accelerated a touch in Q1 (to 1.2% q/q from 0.9% q/q in Q4). Annual growth is running at 3.5%, up slightly from 3.1% in Q4.”

“Household credit growth remains stable, rising 1.5% q/q to be up 5.9% y/y – broadly where it’s been running for the past year. Overall, the housing market remains contained, with a number of offsetting forces at play.”

“New mortgage lending fell 1.3% q/q (sa, 3mma) to be down 2.8% y/y.”

“Banks funding gaps widened slightly over the quarter. Household deposits grew just 0.1% m/m in March to be up just 0.9% q/q, with claims growth of 1.5% q/q outpacing.”