Bank lending rose for the 10th straight month in July as a more positive economic outlook lifted both business and consumer loans.

Total lending rose to $632.6 billion, up 5.9 per cent compared with $597.2 billion in July last year, according to preliminary data from the Monetary Authority of Singapore yesterday.

Bank loans have been rising year on year since October last year with the pace picking up in recent months: lending was up 7.6 per cent in June - the fastest in more than two years.

The moderation in July from June's strong growth was mainly due to slower growth in business loans.

Business lending in July expanded year on year for the eighth straight month to $377.71 billion, up 7.4 per cent from a year earlier. This was slower than June's 10.5 per cent year on year expansion.

"Given that late June to early July was characterised by market volatility, especially in the global bond markets, as major central banks, including the Federal Reserve and European Central Bank, sounded more hawkish, this could have had a knee-jerk impact on market sentiments," noted OCBC economist Selena Ling.

"Thus it would be critical to see if the August bank loan data stabilises."

Lending to companies in the agriculture, mining and quarrying sector declined in July from a year earlier while manufacturing loans were almost flat, but these were offset by increases elsewhere.

Lending to financial institutions rose 16.9 per cent, while loans to the general commerce sector went up 12.2 per cent year on year.

Lending to business services firms surged 28.3 per cent while transport, storage and communication companies took out 17.4 per cent more in loans.

Meanwhile, consumer borrowing rose 3.8 per cent year on year in July to $254.9 billion, supported mainly by an increase in mortgages and car loans.

Housing and bridging loans rose 4.1 per cent year on year to reach $195.5 billion, while car loans went up 3.9 per cent to $8 billion.

"This suggests that consumer confidence remains intact as the domestic labour market remains resilient so far," Ms Ling said.