Lending to Firms Picked Up in July, ECB Says
August 26 2016 - 6:10AM
Dow Jones News
FRANKFURT—Lending to eurozone firms increased on the year at a
faster pace in July than in the previous month, data from the
European Central Bank showed Friday, offering additional evidence
that the eurozone economy was resilient post-Brexit and potentially
weakening the need for the ECB to pump more money into the economy
at its next meeting.
Lending to eurozone firms increased 1.9% in annual terms in July
after an increase of 1.7% in June. Lending to households grew 1.8%,
matching the previous month's pace.
"The ECB will likely be pretty pleased with the July credit
data, and it modestly dilutes the case for further stimulus" at the
Sept. 8 policy meeting, wrote IHS Markit economist Howard Archer
soon after the release.
"In sum, today's monetary figures confirm that on the financial
end of the economy, things continue to move in the right direction,
but at a very slow and increasingly fragile pace," said ING
economist Teunis Brosens in a note.
The lending data follow other sentiment data published earlier
this week that signaled resilience in the eurozone economy and
pushed some commentators to say that the case for ECB action at its
Sept. 8 meeting was no longer convincing.
Still, it may be too early to signal the all clear. On Thursday,
other business sentiment indexes for France and Germany were worse
than expected, suggesting that the U.K. vote and fears about
terrorism were weighing on business confidence.
In monthly terms, lending also grew, with volumes for household
loans increasing by €9 billion in July, after €16 billion in June,
while company loans grew by €12 billion after €8 billion.
The data are the first of this series to fully encompass
Britain's vote to leave the European Union, which took place on
June 23. Last month, the ECB published a banking survey that said
"no clear picture" had yet emerged on how banks assessed the impact
of the U.K. referendum on lending conditions.
But the data also follow the central bank's allocation in June
of loans in a targeted program designed to encourage banks to lend
to the private sector. Under certain conditions banks are even
effectively paid to lend.
The central bank's money supply indicator M3 saw 4.8% annual
growth in July after 5.0% growth in June. Economists polled by The
Wall Street Journal had expected growth of 4.9%. In three-month
average terms, the rate was 4.9%.
The central bank's narrower M1 measure of money supply slowed to
8.4% in July from 8.7% in June. Economists say this figure is a key
leading indicator of the business cycle. "M1 money growth is still
decent, pointing to continuing moderate growth," said Mr.
Brosens.
Write to Todd Buell at todd.buell@wsj.com
(END) Dow Jones Newswires
August 26, 2016 05:55 ET (09:55 GMT)
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