Euro area loans to firms and households continue gradual rise

Euro area money supply growth edged higher in November, as lending picked up, according to ECB data.

The ECB said the annual growth rate of the broad monetary aggregate M3 rose to 3.0 per cent in November 2025, up from 2.8 per cent in October, averaging 2.9 per cent over the three months to November.

The narrower monetary aggregate M1, which includes currency in circulation and overnight deposits, recorded an annual growth rate of 5.0 per cent in November, down slightly from 5.2 per cent in October.

Short-term deposits other than overnight deposits, measured as M2 minus M1, showed an annual contraction of 0.8 per cent in November, compared with a sharper 1.8 per cent decline in October.

Marketable instruments, captured in M3 minus M2, saw their annual growth rate increase to 1.6 per cent, from 1.4 per cent a month earlier.

In terms of contributions to overall M3 growth, M1 added 3.2 percentage points, slightly lower than 3.3 percentage points in October, reflecting the moderation in overnight liquidity.

Short-term deposits other than overnight deposits contributed minus 0.3 percentage points, improving from minus 0.5 percentage points in the previous month.

Marketable instruments continued to make a positive contribution of 0.1 percentage points, unchanged from October.

Looking at deposit-holding sectors, the ECB said the annual growth rate of household deposits increased to 3.3 per cent in November, up from 3.0 per cent in October.

Deposits placed by non-financial corporations grew at an annual rate of 3.4 per cent, remaining unchanged from the previous month.

By contrast, deposits placed by investment funds other than money market funds slowed sharply, with their annual growth rate falling to 0.5 per cent in November, from 2.7 per cent in October.

Turning to the counterparts of M3, the ECB explained that developments reflected movements in items on the monetary financial institution consolidated balance sheet other than M3.

Claims on the private sector made the largest positive contribution, adding 3.2 percentage points to M3 growth, up from 2.7 percentage points in October.

Net external assets contributed 1.9 percentage points, compared with 1.7 percentage points in the previous month.

Claims on general government added 0.3 percentage points, up slightly from 0.2 percentage points in October.

Longer-term financial liabilities exerted a negative contribution of minus 1.2 percentage points, deepening from minus 1.0 percentage points a month earlier.

The remaining counterparts of M3 also weighed on growth, contributing minus 1.1 percentage points, compared with minus 0.9 percentage points in October.

The ECB also reported that the annual growth rate of total claims on euro area residents rose to 2.6 per cent in November, from 2.3 per cent in October.

Claims on general government grew at an annual rate of 0.7 per cent, slightly higher than 0.6 per cent in the previous month.

Claims on the private sector strengthened more visibly, with annual growth accelerating to 3.4 per cent in November, from 2.9 per cent in October.

Adjusted loans to the private sector, which exclude loan transfers and notional cash pooling, also expanded more rapidly, rising at an annual rate of 3.4 per cent, compared with 3.0 per cent in October.

Within this category, adjusted loans to households grew by 2.9 per cent year on year in November, marginally up from 2.8 per cent in October.

Adjusted loans to non-financial corporations recorded a stronger increase, with their annual growth rate rising to 3.1 per cent, from 2.9 per cent in the previous month.