Eurozone Money Supply Growth Accelerates

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Eurozone money supply and credit to the private sector logged faster growth in May, the European Central Bank said Friday.

The monetary aggregate M3 grew 8.9 percent year-on-year, which was faster than April’s revised 8.2 percent increase and economists’ forecast of 8.6 percent.

Similarly, growth in narrow measure, M1, improved to 12.5 percent from 11.9 percent in April.

M3 figure reflects financial distress and precautionary savings rather than economic strength, Peter Vanden Houte, an economist at ING said. “So for the time being, the information content of monetary aggregates is ambiguous to say the least and reflects weakness rather than strength.”

The annual growth rate of credit to the private sector increased to 4.9 percent in May from 4.4 percent in April, data revealed At the same time, adjusted loans to the private sector advanced 5.3 percent, faster than the 4.9 percent rise in the prior month.

Loans to households increased at a steady pace of 3 percent and that to non-financial corporations climbed 7.3 percent, faster than the 6.6 percent rise in April.


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