Lending to euro zone companies and households grew at a subdued pace in November, signaling a lackluster conclusion to the year for the bloc’s economy, according to European Central Bank (ECB) data released Thursday.
Credit growth to businesses slowed to 1.0% year-on-year in November, down from 1.2% in October. While loans to households marked their fastest growth since August 2023, rising 0.9% compared to 0.8% in the previous month, the increase remains modest by historical standards.
Despite these figures, there was a bright spot: the M3 money supply, a broader and more volatile measure of monetary growth, expanded by 3.8%. This marked its fastest pace in two years and exceeded all expectations in a Reuters poll. The M3 measure is sometimes seen as a potential leading indicator of future economic activity.
The subdued credit growth highlights the challenges facing the euro zone economy, with businesses and consumers remaining cautious amid persistent uncertainties, including inflationary pressures and geopolitical tensions. However, the robust expansion in M3 money supply provides some optimism for economic resilience in the months ahead.
Analysts are watching closely for signals on how the ECB will respond to these mixed signals as it navigates a challenging economic landscape.