European Bank Lending Survey Shows Improvements For Businesses

Banks in the euro area have reported that there has been an easing in credit standards on bank loans to enterprises for the fourth quarter of 2015, from their responses to the European Central Bank’s (ECB) January Bank Lending Survey.

The results of the survey revealed that there was a net percentage of -4% of banks,  who said that there had been tightened credit conditions.

While that figure for remained the same quarter on quarter, it was believed to be slightly less pronounced than the expectations of the banks, in the survey for the third quarter of last year.

Competitive pressures were thought to be the reason why there was an increase in bank lending easing.

The banks who participated in the survey also said that lending for mortgages also eased. As for the fourth quarter of last year, there was a minus score of 7% who reported a tightening of mortgage credit.

This was a considerable turnaround from the 5% figure for the same question for the third quarter of last year.

It had been expected that the figure for mortgages was to remain stable for the two quarters.

Terms and conditions have also been eased by the banks, the survey concluded that this had mainly been driven by the further narrowing of margins on average loans.

As with credit standards, the main factor contributing to the easing in terms and conditions was competition.

Net demand for bank loans also increased, this was especially the trend for businesses attempting to gain more working capital, and to fund fixed investment.

The record low level of 0.5% interest rates set by the ECB in September 2014, was a major factor of why enterprises were prepared to borrow more.

As funding has become more easily accessible, fewer banks are now participating in the targeted longer-term refinancing operations (TLTROs), conducted by the Eurosystem.

The banks who were questioned opined that TLTROs main effect on credit supply, was the terms and conditions of credit, as opposed to changes in credit standards.

UK Unemployment Rate at Ten Year Low

Official figures have disclosed that the unemployment rate in the UK is 5.1% from September to November last year, the lowest it has been since August to October in 2005.

The data also confirmed a year on year reduction in the jobless total of 0.7%. In total, the employment rate is now currently at 74%, the highest it has been since comparable records began in 1971.

Although the figures fo not include the job losses that have been incurred in the steel sector, Tata Steel announced that just over 1,000 jobs will go in the UK on Monday.

There are now 22.96 million people working full-time, 436,000 more than for a year earlier. And there was an increase of 152,000 working part time, with 8.43 million in total now employed under part time conditions.

On Average, weekly earnings rose by 2% including bonuses, and by 1.9% excluding bonuses, compared with the same period a year earlier

Euro Rises Against the US Dollar

The euro increased up to buying just under  $1.098 this morning GMT, a rise from $1.86 in the early hours of yesterday afternoon, and the latest figure is that the euro is $1.093 against the greenback.

Selling pressures on the euro may have increased, following the announcement of the lowest Chinese growth for a quarter of a century yesterday, which could effect euro area export markets.

United States’ latest inflation figures are also to be announced this afternoon, an  increase may place more immediate pressure, for further interest rate rises from the Federal Reserve.