April sa M3: +2.0% y/y
M3 sa 3-mo avg: +2.1% y/y
SA private loans: +2.6% y/y

MNI survey median:
April sa M3: +2.4% y/y
M3 sa 3-mo avg: +2.3% y/y
SA private loans: +2.6% y/y

MNI survey range:
April sa M3: +2.1% to +2.8% y/y
M3 sa 3-mo avg: +2.2% to +2.4% y/y
SA private loans: +2.3% to +3.0% y/y

March sa M3: +2.3% y/y
M3 sa 3-mo avg: +2.0% y/y
SA private loans: +2.5% y/y

—

FRANKFURT (MNI) – Annual Eurozone M3 money supply growth came in
weaker than expected in April, while private sector net lending growth
picked up much as predicted, the European Central Bank reported on
Friday.

Rising 2.0% on the year, M3 growth eased to its slowest pace in
three months, falling further below the ECB’s reference rate of 4.5%,
suggesting that underlying inflationary pressures were muted. In monthly
terms, the decline in money supply was negligible.

“Overall, the underlying pace of monetary expansion [...] remains
moderate,” the central bank said in its most recent monthly bulletin.
“At the same time, monetary liquidity accumulated prior to the period of
financial market tensions remains ample and may facilitate the
accommodation of price pressures in the euro area.”

Among the components of M3, narrow money (M1) growth decelerated
sharply to 1.7% y/y. The slowdown in growth adds to mounting evidence
that the Eurozone economic recovery is likely to lose steam in the near
term.

Supporting this assessment, the latest composite purchasing
managers index showed a slowdown in private sector activity in May to a
seven-month low.

The Centre for European Economic Research (ZEW) also highlighted a
decline in optimism regarding the Eurozone’s near-term outlook, which
lowered this indicator to its lowest point since October.

While M1 growth slowed, short-term deposits other than overnight
deposits picked up speed, rising 3.3% on the year in April. Over the
same period, marketable instruments contracted by 0.7%.

On the counterpart side, the growth rate of credit extended to the
private sector was unchanged at +2.2%. Within this component, annual
growth rate of loans to the private sector picked up speed to +2.6%.
Adjusting for loan sales and securitisation, growth was at a more
pronounced +2.9%, the central bank said.

Credit extended to households held firm at +3.4% y/y. Growth in
loans for house purchases was also unchanged, coming in at +4.4%, while
consumer credit fell 0.6% on the year.

Over the same period, loans to non-financial corporations picked up
the pace to +1.0%, the ECB noted.

— Frankfurt bureau: +49 69 720 142, email: frankfurt@marketnews.com —

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