By Todd Buell
FRANKFURT--Lending data from the European Central Bank released
Thursday point to continued improvement in the eurozone economy,
experts say, suggesting that the ECB's stimulus measures are
starting to bear fruit.
Data showed lending to firms and households rose on the month in
February, with loans to corporates rising by EUR8 billion ($8.78
billion) and loans to households by EUR1 billion. Moreover, the
broad monetary aggregate M3 was up 4% in February in annual terms,
above January's growth of 3.7%.
"The ECB's stimulative efforts are succeeding in lifting money
supply growth," said IHS economist Howard Archer.
A further look into the details is also encouraging, say
economists. They point to the M1 component of M3, which includes
money that can be accessed quickly. This has increased in recent
months, having risen by 9.1% on the year in February, after 8.9% in
January.
M1 is the "most liquid money in the real economy, if that grows,
then there's more money on accounts that can be spent," said
Berenberg economist Christian Schulz, adding that it gives a good
indication of where gross domestic product will be nine months down
the road. "The real M1 indicator points to a sharp acceleration of
GDP growth by the end of the year," he said.
Other economists are also upbeat about M1. "M1 is one of the
best leading indicators of the eurozone business cycle, and buoyant
M1 growth points to an acceleration of GDP growth in the quarters
ahead," said ING's Teunis Brosens.
The data come as the ECB is in the first month of its
quantitative easing program, designed to pump over EUR1 trillion
into the eurozone economy. The central bank's main objective is
higher inflation, bringing it to a rate of just below 2%. Eurozone
consumer prices fell 0.3% in February from a year earlier.
The central bank also launched a program last year of
conditional four-year loans to banks, designed to encourage
commercial banks to pass funds on to eurozone businesses.
Write to Todd Buell at todd.buell@wsj.com
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