Euro zone lending takes another hit in May

Euro zone bank lending slowed further in May, dragged down by higher interest rates and a recession in the bloc’s vast manufacturing sector, European Central Bank data showed on Wednesday.

The ECB has been raising interest rates at the fastest pace on record over the past year to combat stubborn inflation, weakening demand for bank credit and slowing everything from the housing market to construction and consumer spending.

Lending growth to businesses in the 20-nation currency bloc dipped to 4.0% in May from 4.6% a month earlier while household credit growth slowed to 2.1% from 2.5%.

Growth in the M3 measure of money circulating in the euro zone meanwhile fell to 1.4% from 1.9%, coming just below expectations for 1.5% in a Reuters survey.