Business demand for credit slows

Annual credit growth has halved as businesses take a cautious view of the economic outlook.

Credit data provider Veda's quarterly business credit demand index rose by an annual 1.5 per cent rate in the March quarter compared with 3 per cent as of the previous three months.

The index has historically proven to be a lead indicator of how the overall economy is performing.

The latest data indicates a slowing annual rate of growth in business credit applications, which suggests caution around the economic outlook, Veda general manager Moses Samaha says.

It points to a slight easing in economic growth from the 3 per cent pace recorded in 2015.

Business loan applications slowed to 3.2 per cent in the March quarter and asset finance eased to 3.3 per cent, while trade credit fell by 1.7 per cent.