Tuesday October 27, 10:09 AM
UPDATE 1-Euro zone private loans drop yr/yr, mortgages up
FRANKFURT, Oct 27 (Reuters) - Loans to euro zone households and firms fell on an annual basis in September for the first time ever, but economists said a pick-up in loans on a monthly basis was a sign credit was starting to flow again.
European Central Bank figures on Tuesday showed loans to the private sector contracted 0.3 percent year-on-year last month, the first fall since data were first collected in 1991.
But loans rose slightly on a monthly basis, increasing after two months of falls. A rise in loans to households -- especially for house purchase -- made up for a drop in corporate loans.
'The year-on-year fall is going to catch everyone's imaginations but that's a lagging indicator of what's been going on,' Fortis (Amsterdam: FORAL.AS - news) economist Nick Kounis said.
'One of the most notable developments is in the monthly flow data. We have seen a number of successive months of rises in lending to households, especially mortgage lending, so we are starting to see signs of a turnaround there.'
Loans to households rose 14 billion euros month-on-month in September, the fifth increase in a row, although lending was still 0.3 percent lower than a year ago.
The figures also showed annual growth of M3 money supply -- a broad measure of money available to spend -- slowed to 1.8 percent from 2.6 percent in August, below the 2.2 percent growth expected by economists in a Reuters poll.
Economists said this would confirm the ECB's view that inflation pressures remained subdued.
(Reporting by Krista Hughes, editing by Mike Peacock) Keywords: ECB/M3
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