July sa M3: +2.0% y/y
M3 sa 3-mo avg: +2.1% y/y
SA private loans: +2.4% y/y

MNI survey median:
July sa M3: +2.2% y/y
M3 sa 3-mo avg: +2.2% y/y
SA private loans: +2.5% y/y

MNI survey range:
July sa M3: +2.0% to +2.3% y/y
M3 sa 3-mo avg: +2.2% to +2.3% y/y

June sa M3: +1.9% y/y
M3 sa 3-mo avg: +2.2% y/y
SA private loans: +2.5% y/y

FRANKFURT (MNI) – Eurozone M3 money supply growth accelerated less
than as generally expected in July and growth in private sector lending
unexpectedly slowed slightly, seasonally adjusted data from the European
Central Bank showed Friday.

At 2.0%, annual money supply growth remains well below the ECB’s
reference value of 4.5% that is seen to point to price stability. For
June, M3 growth was revised downward to 1.9% from 2.1%

Among the main counterparts of M3, annual growth of total credit
granted to euro area residents was +2.5% after +2.7% in June. Growth of
credit to governments increased to +4.9% from +4.7% in the previous
month.

Despite the “moderate” pace of M3 money growth, the central bank
warns that “monetary liquidity accumulated prior to the period of
financial market tensions continues to be ample, and may facilitate the
accommodation of price pressures in the euro area.”

Private sector lending data, however, does not suggest that this
accumulated liquidity will be flushed into the system any time soon.

The annual growth rate of credit extended to the private sector
decreased to +1.9% in July from +2.2% in the previous month. Among the
components of credit to the private sector, the annual growth rate of
loans stood at +2.4% in July, compared with +2.5% in the previous month.
Most analysts had expected a stable reading at +2.5%.

Loans to non-financial corporations were up at +1.6% year after a
+1.5% rise in June. On the month, loans dropped E3 billion after a E23
billion rise in June.

Annual growth of loans to households decreased to +3.0% in July
from +3.2% in June, with lending for house purchases — the most
important component of household loan — down to +3.9% after +4.3%.

ECB President Jean-Claude Trichet earlier this month reiterated
that “to provide adequate scope to expand the provision of credit to the
private sector, it is essential for banks to retain earnings, to turn to
the market to strengthen further their capital bases or to take full
advantage of government support measures for recapitalization.”

Within M3, annual M1 growth decelerated to 0.9% from 1.2% in June.
Short-term deposits other than overnight deposits grew at a steady rate
of 3.7% on the year. Marketable instruments were up 0.9% on the year
after easing 0.9% in June.

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

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