Lending growth to businesses in the 20 nation currency bloc slowed for the third straight month, to 6.1% in January from a 6.3% rise a month earlier, while household credit growth slowed to 3.6% from 3.8%. Meanwhile the ECB's M1 measure of currency in circulation plus overnight deposits, a good leading indicator of future activity, shrunk by 0.7%, the first ever negative reading.
"Tightening efforts are having a clear effect on money supply and private sector borrowing, which will have a dampening impact on economic growth and inflation in 2023," ING economist Bert Colijn said. "We consider the impact of the hike cycle an underappreciated downside to economic activity for this year." The ECB's Bank Lending Survey earlier showed banks already tightened access to credit in the fourth quarter by the most since the bloc's debt crisis a decade ago and predicted even more restrictive lending policies for the three months to March. The monthly flow of loans to companies was a mere 2 billion euros ($2.11 billion) in January but that was an improvement on the negative 25 billion euro reading in December.
Growth in the M3 measure of money circulating in the euro zone meanwhile fell to 3.5% from 4.1%, coming well below expectations for 3.9% in a Reuters survey. ($1 = 0.9475 euros) (Reporting by Balazs Koranyi Editing by Francesco Canepa and Susan Fenton)
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