Eurozone M3 Growth Eases In August

Eurozone money supply increased at a slower pace in August and credit to the private sector logged a steady growth, the European Central Bank reported Friday.

The broad monetary aggregate M3 expanded 9.5 percent on a yearly basis, slower than the revised 10.1 percent increase seen in July. M3 was expected to grow 10.2 percent.

Likewise, annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, decreased to 13.2 percent from 13.5 percent in July.

As regards the dynamics of credit, credit to euro area residents climbed 8 percent, following a 7.6 percent rise in the previous month. Credit to general government rose to 16.5 percent from 15.5 percent a month ago.

Credit to the private sector increased at a steady pace of 5 percent in August.

Adjusted loans to the private sector rose 4.6 percent versus 4.7 percent in July. Loans to households gained 3 percent and that to non-financial corporations climbed 7.1 percent.

Stable lending to the private sector and slower growth in monetary aggregates indicate that emergency liquidity effects are waning, but also indicate that business investment is likely to remain weak amid high economic uncertainty, Bert Colijn, an ING economist, said.

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