Australians Living Within Their Means

It appears that Australians are more conscious of how they spend and are less likely to accumulate debt. This is what industry analysts are saying after private sector credit levels dropped to a 19-month low last November 2012.

CommSec chief economist Craig James said consumers are becoming more careful when it comes to debt. Aussies are living within their means instead of borrowing just to maintain a certain standard of lifestyle.

James said Aussies are less likely to take on large debts if the asset is not growing or if it’s on the decline.

The Reserve Bank of Australia said that total credit increased some 2.5 percent over the year to November 2012. Business credit, however, dropped 0.6 percent in November.

Housing credit increased some 0.4 percent in the same month while personal credit dropped 0.2 percent.

Michael Turner said recovery in credit growth is not expected to happen in the next few months even when the RBA has been cutting cash rate since November 2011. He added that the housing sector would also continue to be sluggish and businesses would be more cautious when it comes to debt.

Turner is a fixed-income strategist from the RBC Capital Markets. He added that the RBA may again announce a cut rate by the second quarter of the year.