By Craig James

The cupboard is largely bare in terms of key domestic economic indicators or events until January 4. Still, the private sector credit or lending figures are released on New Year’s Eve.

In terms of private sector credit, lending probably advanced by 0.7 per cent in November, lifting the annual growth rate from 6.7 per cent to a fresh 7-year high of 6.8 per cent.

The final countdown  

Encouragingly the change to the mix in lending has been more noticeable over the past few months. Business borrowings have shown strong momentum and there is clearly less reliance on investors housing. In fact investor housing recorded the slowest growth in 2½-years in October, as opposed to business borrowings which surged by 1 per cent in October, with annual growth at a 6½-year high. While it is still early days it is a welcome result that resonates with the stellar lift in employment and improvement in business profitability in recent months.

In contrast to Australia, there are still plenty of indicators to watch in the US, focussing on consumer spending, consumer confidence and the housing market. But also the influential regional manufacturing surveys are released over the next couple of weeks and will feed into the ISM manufacturing gauge released in the New Year.

Overall, US economists are forecasting modest improvements in indicators to be released over the coming fortnight. The final reading on September quarter economic growth should confirm that the US recovery is on track, supporting the decision by the Federal Reserve to lift interest rates for the first time in almost a decade. Similarly house price growth remains healthy, while activity and new construction in the sector remains strong. In fact single-family housing starts are now holding at the best levels since early 2008. It’s clear the the US economy is in good shape with firm economic growth and low unemployment. No doubt the focus in the New Year will be on the discussion of further potential future US interest rate hikes.