October sa M3: +2.6% y/y
M3 sa 3-mo avg: +2.8% y/y
SA private loans: +2.7% y/y

MNI survey median:
October sa M3: +3.3% y/y
M3 sa 3-mo avg: +3.2% y/y
SA private loans: +2.5% y/y

MNI survey range:
October sa M3: +2.5% to +3.8% y/y
M3 sa 3-mo avg: +2.8% to +4.0% y/y
SA private loans: +2.5% to +3.2% y/y

September sa M3: +3.0% y/y
M3 sa 3-mo avg: +2.6% y/y
SA private loans: +2.5% y/y
—

FRANKFURT (MNI) – Private sector loan growth in the Eurozone
surprised to the upside in October, rising 2.7% on the year, its fastest
pace since May, while the money supply growth unexpectedly slowed to
2.6%, the European Central Bank reported on Monday.

Adjusting for loan sales and securitisation, annual private sector
loan growth accelerated to 3.0% from 2.7% in September, lifting the
growth rate of overall credit extended to the private sector to 2.1%
from 1.5%.

Loans to households slowed to +2.2% y/y, while mortgage lending –
the most important part of consumer borrowing – slipped to +3.0% from
+3.9%.

Conversely, the growth rate of loans extending to non-financial
corporations picked up to +1.9% from September’s +1.6%.

Data continue to point to banks refusing to lend to one another,
leading to stress in the interbank market and likely to hamper credit
growth to the real economy.

The ECB reported last week that it had lent banks nearly E250
billion in its seven-day tender, the highest since mid-2009. ECB data
also showed banks’ overnight deposits at the central bank trending
upward on average since August and hitting a two-week high last Friday.

Weakness in a number of indicators, including the PMIs, Ifo and the
European Commission’s consumer confidence indicator, suggest that demand
for credit could also wane in the near term.

Turning to M3, October’s deceleration brought the three-month
moving average to 2.8%, well below the ECB’s target for price stability
of 4.5%.

Within M3, narrow money (M1) growth fell back to 1.7% on the year
from +2.0% in September, adding to evidence that the Eurozone economy is
heading towards a protracted slowdown.

The annual growth rate of short-term deposits, excluding overnight
deposits, slowed to +2.2% in October from +3.1%.

–Frankfurt newsroom +49 69 720 142; e-mail:frankfurt@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$,MTABLE]