The long-running year-on-year decline in lending to eurozone firms nearly ground to a halt in November, bolstering hopes that a rise in credit will aid the region's economic recovery. European Central Bank figures published on Wednesday showed company loans rose 11 billion euros in the month, following a 10 billion eurodrop in October, leaving them just 0.1 percent weaker than the same time a year ago.
"This is a welcome, limited step in the right direction. This raises hopes that eurozone banks may be becoming more willing to lend to what they perceive to be less risky businesses," said IHS Global Insight economist Howard Archer. Loans to the private sector overall were up 2.0 percent over the year, more than economists' expectations of a 1.5 percent improvement and up on the 1.5 percent gain recorded in October.
Data for lending to home buyers, seen by economists as a potential leading indicator of lending trends, was less promising however, with mortgage lending slowing and lending to households overall also slowing. The annual decline in the pace of mortgage lending was the first since September 2009.
The data also pointed to the absence of significant price pressures in the 16-nation region, bolstering economists' expectations that the ECB will not raise official interest rates until late next year at the earliest. At 1.3 percent, the three-month moving average of M3 growth remains well below the ECB's reference rate of 4.5 percent, above which the bank sees dangers to medium-term price stability.
Inflation in Germany, the eurozone's industrial engine, also showed signs of growing strength on Wednesday. Early data from four of the country's states pointed to national inflation numbers coming in higher than expected. Comparing the figures with falling prices in troublespots such as Ireland underscores the eurozone's two-speed economy and the difficulty the ECB faces as it tries to select the right monetary policy to suit the needs of the polarised region.
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