October sa M3: +3.9% y/y
M3 sa 3-mo avg: +3.1% y/y
SA private loans: -0.7% y/y
MNI survey median:
October sa M3: +2.9% y/y
M3 sa 3-mo avg: +2.7% y/y
MNI survey range:
October sa M3: +2.5% to +3.0% y/y
M3 sa 3-mo avg: +2.7% to +2.8% y/y
September sa M3: +2.6% y/y (revised from +2.7%)
M3 sa 3-mo avg: +3.0% y/y (unrevised)
SA private loans: -0.9% y/y (revised from -0.8%)
—
FRANKFURT (MNI) – Loans to the Eurozone private sector continued to
trend lower on the year in October, while annual M3 money supply growth
was the strongest since April 2009, the European Central Bank reported
Wednesday.
Private sector loans were down 0.7% y/y in October after -0.9% in
September. Adjusting for sales and securitisation, the annual decline
was a more modest 0.4%, unchanged from September’s slide.
Annual household loan growth accelerated to +0.5% from +0.1% in
September, with mortgage loans – the most important component of
household loans – up 1.3%, 0.6 percentage point higher than September’s
rate.
While the monthly slide in loans to non-financial corporations
slowed markedly to E8 billion from E24 billion, the annual decline of
1.8% in October was greater than September’s -1.5%. As a result, overall
credit extended to the private sector fell 1.4% on the year after
September’s -1.2%.
Credit expected to the public sector increased by 8.8% y/y after
+8.2% in September. Loans to government rose 2.9% y/y after +1.6% in
September.
The ECB’s latest bank lending survey hinted at further erosion in
credit levels, as respondents expected loan demand to decline in 4Q,
while predicting tighter credit conditions. Such results are hardly
surprising given the current recession, the uncertain short-term outlook
and firms’ and households’ need to deleverage.
“To a large extent, subdued loan dynamics reflect the weak outlook
for GDP, heightened risk aversion and the ongoing adjustment in the
balance sheets of households and enterprises, all of which weigh on
credit demand,” ECB President Mario Draghi said at his press conference
early this month.
“At the same time, in a number of euro area countries, the
segmentation of financial markets and capital constraints for banks
restrict credit supply,” Draghi added. “The recent results of the bank
lending survey for the third quarter of 2012 underpin this assessment.”
Broad money (M3) rose 3.9% on the year after September’s +2.6%,
bringing the three-month moving average to +3.1%.
Annual narrow money (M1) supply growth also saw a significant
pick-up, jumping 6.4% after +5.0% in September, while short-term
deposits other than overnight deposits were up 1.7% after September’s
+0.6%. Marketable instruments were stable on the year following
September’s -1.5%.
Despite the acceleration in M3, the three-month average remains
below the ECB’s price-stability target of +4.5%, suggesting subdued
inflationary pressures for the Eurozone in the medium term. The
Organisation for Economic Cooperation and Development expects Eurozone
inflation to slow from 2.5% this year to +1.6% next year and to +1.2% in
2014.
Forecasters polled by the ECB last month penciled in +1.9%
inflation for both 2013 and 2014. Risks to the baseline inflation
outlook were seen as “broadly balanced,” the ECB said.
— Frankfurt bureau: +49 69 720 142; e-mail: twailoo@mni-news.com —
[TOPICS: M$$EC$,M$X$$$,M$XDS$,MT$$$$,MTABLE]