Eurozone money supply growth edges higher in March, ECB says
Money supply in the euro area grew at a slightly quicker pace in March, according to the European Central Bank, but not fast enough to quell all economists´ concerns about the flow of credit in the single currency bloc.
The Eurozone´s money supply, as measured by the M3 monetary aggregate, grew slightly more quickly in March, with the annual rate of growth edging higher from a downwardly revised pace of 4.9% in February to 5.0%.
February´s reading was originally reported at 5.0%.
The three-month moving average for M3, which is meant to smooth out fluctuations in the monthly data, came in at 5.0%, up by one tenth of a percentage point from February´s print of 4.9%.
Within M3, the annual growth rate of deposits placed by non-monetary financial corporations decreased from 6.8% in February to 4.0% in March.
Credit to the private sector, one of the most widely watched gauges, slipped to a rate of expansion of 1.1%, down from a clip of 1.2% in the month before.
Growth in credit consistent with flat-lining growth
"March’s euro-zone monetary data suggest that economic growth remains fairly slow. While the ECB has since expanded its stimulus measures, we doubt that this will boost money and lending growth significantly," Jack Allen, European economist at Capital Economics said in a research report sent to clients.
Allen pointed out how so-called 'narrow money' , as measured by M1, was "still fairly strong" despite a dip in its rate of growth from 10.2% to 10.1%.
That was still "broadly consistent" with annual household spending of approximately 2.0%, he said.
Yet the "counterpart lending data remained weak," he judged.
When adjusted for sales and securitisations lending to the private sector was unchanged at 0.9%, Allen said.
Furthermore, the 'credit impulse', which measures the change in the flow of credit and is correlated to the rate of growth in gross domestic product, "was at a level consistent with annual GDP growth flat-lining, at best."
Allen also drew a sombre picture when it came to the likelihood for the European Central Bank´s latest stimulus package, unveiled in March, to kick-start lending.
IHS had a more positive take on the data
"Further reasonable news for the ECB saw Eurozone M3 money supply growth edge back up to 5.0% in March having dipped to 4.9% in February from 5.0% in January. The ECB is looking to increased, above target (which is 4.5%) money supply growth to lift inflationary pressures," Dr.Howard Archer, chief European+UK economist at IHS said in a research report sent to clients.