Reserve Bank figures out today continue to show an economy slowing as credit growth declines, especially for business, with only lending to prospective home buyers, especially first home buyers, keeping it aloft.

Thanks to the first home buyers’ grant, owner-occupied housing is now running at 8.8%, the highest level since last December, when it was slowing, not rising as it is now.

Except for housing, it could be an economy in recession, but it would seem the economy is doing a bit better than that. Building approvals for June rose 9.3% with a 4.9% rise for owner-occupied housing, to be up around 16% over the first half of the year.

The confidence that Australia has dodged the bullet from the recession will again be tested next week when we will get retail sales and international trade figures for June, house price indexes for the June quarter, plus the important labour force figures for the month as well.

Looking at the building approvals and the credit growth figures from the RBA, the economy would appear to be a trick pony at the moment, with the stimulus for home construction and buying keeping overall lending growing; up 0.1% in June after a fall of 0.1% in May.

That left total credit growth for the year to June (2008-09 financial year) at 3.4 per cent, down from the 3.8% rate in the year to May and the 12.0% rate a year ago for the 12 months ending June 2008.

The RBA said housing credit rose 0.6% in June from May (when it rose 0.5% over April).

“Over the year to June, housing credit rose by 7.1 per cent. The rise in housing credit over June was mostly due to growth in lending to owner-occupiers, with only weak growth in lending to investors.”

A year ago in June 2008, home lending was running at an annual 9.9%, with owner occupied lending growing at 10.5% (8.8% in the year to June 2009) and investor housing lending at an annual 8.5%.

The RBA said other personal credit fell by 0.3 per cent over June, following a decline of 0.4% over May and was down 7.0%, in the year to June because of “a large decline in margin lending.”

Business credit growth was very weak, it fell 0.5% in June 2009, following a decline of 0.8% in May.

“Since its peak in November 2008, most of the decline in business credit has been due to falls in foreign currency denominated lending.

“These falls reflect both the appreciation of the Australian dollar over this period and some reduction in the stock of foreign currency denominated lending. Over the year to June, business credit rose by 0.5 per cent,” the RBA said.

And in other economic news, the TD Securities/Melbourne Institute inflation gauge for July has shown a big jump as communications charges and government fees rose.

TD Securities said the gauge rose 0.9% in July, “the biggest monthly rise in the history of the report.” It was up 1.9% in the year to July.

“Higher communications charges, as well as the cost of utilities and “other housing”, contributed most to the July result, the firm said, with the “other housing category” rising strongly due to council rates and charges “seasonally rising in July.”

But the prices of fruits and vegetables, financial services and audio-visual and computing equipment fell.