Canadian household credit outstanding expanded by 4.7% last year, a further moderation from the 4.8% year-over-year growth rate in November and down significantly from a 6.2% increase in December 2011. Moreover, the 4.7% increase in household debt in 2012
represents the slowest calendar year growth rate since 1995.
Again highlighting its divergent trend, business financing growth accelerated for a sixth consecutive month in December, with balances up 7.4% on a year-over-year basis following a 7.0% rise in the previous month. This represents the fastest annual expansion of business financing since 2007.
According to experts at RBC Economics, "the growth in Canadian household and business credit balances have been following contrasting paths since the end of the recession and the December data provide no indication that these trends will soon change course.
"As we have suggested previously, the continuation of these developments is positive for the Canadian economic outlook. The slowdown in the pace of personal debt accumulation helps to mitigate the risks to the financial system associated with households becoming overly indebted while the ramping up of borrowing by Canadian firms suggests that businesses are well positioned to increase investment and expand payrolls over the coming months.
"We expect," the bank concludes, "that each of these respective trends will continue over the near-term."
