Eurozone lending falls for 8th consecutive month in December

FRANKFURT: Loans to companies and households in the Eurozone contracted for the eighth month running in December, showing low official borrowing costs are having little success in reviving investment and spending.

Loans to the private sector fell 0.7% from the same month a year ago, European Central Bank data showed, in line with the mid-range forecast in a Reuters poll of economists.

The monthly flow of loans to nonfinancial firms fell €22 billion in December after falling by €7 billion in November. The monthly flow of loans to households showed adrop of €3 billion after a rise of €6 billion in the previous month, a Commerce Department report showed on Monday in Washington.

The median forecast of 76 economists surveyed by Bloomberg called for a 2% advance. Excluding demand for transportation.

US durable goods orders up

Orders for durable goods climbed more than forecast in December, showing US manufacturing rebounded following a mid-year slump. Bookings for goods meant to last at least three years rose 4.6%, exceeding the highest forecast of economists surveyed by Bloomberg, after a 0.7% gain in November.

Improving auto sales and a rebound in housing are underpinning the economic expansion, indicating orders will keep coming in for manufacturers from General Electric to DuPont.

Improving auto sales and a rebound in housing are underpinning the economic expansion, indicating orders will keep coming in for manufacturers from General Electric to DuPont.

Faster growth in overseas markets and an agreement in Congress to avoid automatic government-spending cuts would help lift business confidence and spur greater investment, across the Eurozone as some countries struggle to get their stricken economies back on track, though progress has been made.

On a country-by-country basis, the data showed a 22 billion euro drop in private-sector lending in Spain, the largest monthly fall since July. In Portugal, private-sector lending fell by 2.6 billion, the biggest drop in a year.

“Although Eurozone banks’ liquidity positions improved during 2012, it is clear that this has had little effect in boosting private-sector lending,” said Howard Archer, economist at IHS Global Insight. Italy, however, posted a healthy rise of 12.6 billion euros to 1.757 trillion in private-sector loans.

The central bank has taken some of the heat out of the Eurozone crisis by announcing a new, as yet unused, bond-purchase programme, but the bloc’s economy remains weak and is expected to have shrunk in the final months of 2012. ECB President Mario Draghi noted in early January some economic indicators had stabilised at low levels and financial markets’ confidence had improved.