According to a report from the European Central Bank, the money supply in the Eurozone displayed a marginal increase in December, marking the first expansion seen in six months.
The main monetary aggregate, known as M3, recorded an annual increase of 0.1 percent, in contrast to November's decline of 0.9 percent. This unexpected rise went against the predicted 0.7 percent fall, and is the first growth seen since June. In comparison, the three-month average for M3 reported a decrease of 0.6 percent leading up to December.
The narrower monetary measure, M1, which comprises currency in circulation and overnight deposits, experienced a slower annual decline of 8.5 percent, compared to November's sharper drop of 9.5 percent.
The report also highlighted that private sector credit saw an annual increase of 0.5 percent, an improvement from November's 0.3 percent. With adjustment, loans to the private sector also revealed an annual rise of 0.5 percent, up from November's 0.4 percent uptrend.
Looking at the borrowing sectors, adjusted loans to households exhibited slower growth at 0.3 percent while loans to non-financial corporations improved, recording an increase of 0.4 percent, up from no growth previously.
The data suggests subdued lending activity, with monetary transmission putting a clear weight on investment, according to ING economist Bert Colijn. He voiced his caution regarding expectations of stronger investment, attesting that the minimal increases in bank lending to businesses over two months do not constitute a trend, and that the continuing demand for fixed investment is still pressuring loan growth.
