Eurozone March money numbers released last week showed further solid monthly gains in M1 and M3, supporting optimism about near-term economic prospects. The country detail, however, was the more interesting feature of the data.
In the big four economies, six-month growth of real M1 deposits* is now strongest in France – see first chart. Recent purchasing managers’ surveys have been much weaker in France than the rest of the Eurozone but the money pick-up suggests that economic news will surprise positively over coming months.
Spain had been topping the ranking but real M1 deposit growth has fallen since end-2014, though remains healthy. GDP rose by 0.7% and 0.9% respectively in the fourth and first quarters but gains may moderate ahead of the general election due by December.
In the three bailout economies, real narrow money trends remain strong in Ireland but have softened in Portugal while turning negative in Greece – second chart. As in Spain, the Portuguese slowdown may be relevant for parliamentary elections due in September-October. Greek real money growth had picked up in late 2014 and was being reflected in an economic recovery, which the confidence-sapping actions of the incoming Syriza-led government have aborted: the current recession cannot be blamed on externally-imposed “austerity”.
*M1 comprises notes / coins and overnight deposits. A country breakdown is available only for the latter.
