–Corrects Reference To Most Recent Previous M3 Increase
June sa M3: +0.2% y/y
M3 sa 3-mo avg: flat y/y
SA private loans: +0.3% y/y
MNI survey median:
May sa M3 -0.1% y/y
M3 sa 3-mo avg: -0.2% y/y
MNI survey range:
May sa M3 -0.4% to +0.1% y/y
M3 sa 3-mo avg: -0.3% to -0.1% y/y
May sa M3: -0.1% y/y (revised from -0.2%)
M3 sa 3-mo avg: -0.1% y/y (revised from -0.2%)
SA private loans: +0.2% y/y
—
FRANKFURT (MNI) – Eurozone M3 broad money supply growth surprised
to the upside in June, registering its first annual rise since a
marginal gain January, while loans to the private sector accelerated on
the year, the European Central Bank reported on Tuesday.
Reaching a 14-month high of E9.423 trillion at the end of June, M3
was up 0.4% compared to May and was 0.2% higher on the year. Between
April and June, broad money was unchanged compared to the same period
one year ago.
The growth of loans to the private sector also picked up speed,
posting a 0.3% rise on the year after +0.2% in May.
Ahead of the M3 release, ECB Executive Board member Juergen Stark
had highlighted the improvement in private sector loan growth. “Whether
this is already a turning point is too early” to say, he conceded.
“However, this is a positive sign.”
In its most recent monthly bulletin, the ECB noted that while M3
appeared less affected by the steep yield curve and the allocation of
funds into longer-term asset holdings outside of broad money, official
growth rates continued to understate underlying trends. However, “it
does so to a diminishing extent,” the bank said.
Nevertheless, short-term developments of M3, as well as its
components and counterparts remain volatile, the ECB added. “Given the
continued tensions in some financial market segments, this volatility
may well persist,” the central bank warned.
The annual rise in M3 also masks the strong contrasts between its
main components, as evidenced by the slowing annual growth in M1 (+9.2%
from May’s +10.3%), and the recovery in short-term deposits other than
overnight deposits (-7.2% from -8.0%) and other marketable instruments
(-7.3% from -9.8%).
Moreover, with M1 growth slowing for the seventh consecutive month,
GDP growth may see some notable deceleration in the coming months. In
its most recent Eurozone economic assessment, the International Monetary
Fund had noted recent economic indicators pointing to “some slowing of
momentum during the second half of 2010.”
Still, no short-term deflationary risks are seen in the Eurozone,
ECB’s Stark said early this month.
Regarding the main counterparts of M3, the annual growth rate of
total credit extended to euro area residents slowed to +1.5% from +1.7%
on the year, while credit extended to government grew 8.1% y/y, down 1.3
percentage points from May’s figure.
Credit granted to the private sector was unchanged compared to one
year ago. Within this category rate of change of loans to private sector
increased modestly to +0.3% in June from +0.2% previously, while growth
rate of loans to the private sector was unchanged at +0.2% y/y.
Growth of loans to households continued to strengthen on the year,
reaching +2.8% in June. Conversely, loans to non-financial corporations
continued to contract, down 1.9% compared to June 2009. However, both
components showed improvements, with respective growth rates each 0.2
percentage points higher than a month earlier.
–Frankfurt newsroom +49 69 720 142; e-mail:frankfurt@marketnews.com
[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$]
