Eurozone money supply slows, points to weaker economy: analysts

FRANKFURT, July 25, 2008 (AFP) – Growth of eurozone money supply and credit eased sharply last month, the European Central Bank said on Friday, providing more evidence of a possibly major economic slowdown, analysts said. The ECB said its M3 indicator of money supply showed growth of 9.5 percent in June, down from a revised May figure of 10 percent, its lowest level since November 2006.

The figure came a day after a survey showed that eurozone business activity fell in July to the lowest level since just after the September 11, 2001 terror attacks, and business confidence was seen plunging in Germany, France, and Italy, the three biggest eurozone economies.
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The ECB’s three-month moving average for M3 growth, which is less volatile, also slipped to 9.9 percent in the April to June period from 10.1 percent in March to May.

Loans to the private sector grew by 9.8 percent in June, down from 10.5 percent in the previous month, the ECB said.

“Less buoyant demand for loans suggests that business will invest less and consumers will spend less in the future,” said Bank of America economist Holger Schmeiding.

He pointed above all however to the more narrow M1 indicator which tracks cash and overnight deposi

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