Euro Area: Credit growth accelerates in May

Total loans in the Euro Area accelerated in May for the second month in a row, increasing by 5.8% y/y from 5.5% y/y in April, according to the most recent data by the European Central Bank (ECB).

Total deposits' growth, on the other hand, changed the direction slowing down to 4.8% y/y compared to 5.1% y/y in the previous month. The May figure is the lowest since January 2020.

Total loans are calculated as the sum of loans to Insurance corporations and pension funds, other financial intermediaries, households, non-financial sector, government and non-Euro Area residents, while the total deposits are the sum of all deposits by non-financial corporations, households, insurance and pension funds and other financial intermediaries.

Up until February, loans and deposits have been following diverging paths, which was interpreted a sign of an ongoing economic recovery. On the one hand, the substantial acceleration of crediting underscores revival of business activity and household consumption, and on the other hand, the slowing down of the total deposits points to utilized liquidity by the economic agents, which was previously frozen due to the restrictions of mobility and production in terms of business, and due to elevated uncertainty for households.

The ECB also published data on the M2 monetary aggregate which increased by 6.2% y/y in May 2022, following a growth of 6.7% y/y in the previous month.

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Read more in the quarterly report Euro Area Economy in a Snapshot - Q2 2022.