Bank Lending in Euro Zone Slumped in November, Data Show

In its monthly report on lending, the E.C.B. said Thursday that loans to companies, not including banks, in the 17-nation currency zone fell at an annual rate of 1.8 percent in November, the same rate of decline as in October.

That is a sign that E.C.B. measures have not yet succeeded in restoring the flow of credit to troubled countries like Spain. Credit is a prerequisite for economic growth, and the E.C.B. closely watches data on lending in deciding the level of the official interest rate.

The latest data could encourage expectations that the E.C.B. will soon cut the benchmark rate from 0.75 percent, already a record low, as soon as its monthly monetary policy meeting on Jan. 10.

“Today’s euro zone bank lending figures are a timely reminder that the economic situation in the 17-country region remains very fragile,” Martin van Vliet, an analyst at ING Bank, wrote in a note to clients Thursday.

The E.C.B. report on monetary conditions did contain some good news, however. Mr. van Vliet pointed out that bank deposits in Spain and Greece rose in November, a sign that people are no longer pulling money out of those two countries.

“This confirms that fears of a (partial) euro zone breakup are gradually receding,” Mr. van Vliet wrote.

In addition, according to a separate report, unemployment figures from Germany showed that the labor market is holding up well despite slower economic growth.

The unemployment rate rose to 6.7 percent from 6.5 percent, the German Federal Employment Agency said. Adjusting for seasonal fluctuations, however, the number of unemployed people was unchanged at 6.9 percent. About 2.9 million people in Germany are jobless.

The stable German labor market, despite poor weather that would normally suppress hiring, is a sign that “most firms do not expect the currently weak economic environment to persist for much longer,” Thomas Harjes, an analyst at Barclays, wrote in a note.

According to the methodology used by the International Labor Organization, which uses a narrower definition of joblessness, Germany’s unemployment rate was only 5.3 percent.

Article source: http://www.nytimes.com/2013/01/04/business/global/bank-lending-in-euro-zone-slumped-in-november-data-show.html?partner=rss&emc=rss