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Euro Zone M3 Money Supply Improves More Than Expected In December, German Import Prices Climb 1.9%

‘It’s good that banks are lending more to companies. But the whole thing is still fragile, because of the weak growth in Europe ‘. -Dirk Gojny, National Bank

Bank lending to the Euro zone’s companies rose at the strongest pace in more than four years in December, while the total amount of money in circulation advanced more than expected, official data revealed on Friday. According to the European Central Bank, corporate bank loans in the 19-member state currency bloc climbed 2.3% in the reported month, following November’s upwardly revised gain of 2.1%. Furthermore, household lending rose 2.0% in December, the largest gain since the middle of 2011, compared to the preceding month’s 1.9% increase. The figure came in right in line with analysts’ expectations. The Central bank also released its monthly data on the amount of money in circulation, which is an important indicator for predicting future economic activity. According to the Bank’s report, the M3 Money Supply climbed 5.0% on an annual basis in the same month, following the prior month’s 4.8% and slightly surpassing economists’ forecasts for 4.9%.

Other data released by Destatis showed that German import inflation accelerated at a stronger than expected pace last month. Import prices climbed 1.9% in December, after growing just 0.7% in the previous month. Markets expected prices to increase 1.3% in the reported month.

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