Disappointing eurozone credit growth data will put more pressure on the European Central Bank to take additional action to boost the euro area's lacklustre recovery, analysts said on Tuesday.
Growth of loans to the private sector in the euro area, a gauge of economic health, appears to be losing momentum again, new ECB data showed.
After long months of contraction, the volume of loans to private businesses and households has finally started growing again.
But the rate of that expansion slowed last month, with the volume of loans increasing by just 0.6 percent in September compared with the same month in 2014, the ECB calculated.
That is slower than the previous month when private sector loans had increased by 1.0 percent.
The long and deep financial crisis in the 19 countries that share the euro has squeezed lending, thus dampening economic activity.
The ECB has launched a raft of different policy measures to get credit flowing again, most significantly a massive programme to buy more than one trillion euros ($1.1 trillion) worth of public sector bonds to pump liquidity into the system.
But last week, ECB chief Mario Draghi said the central bank would re-examine its monetary policy stance in December to determine whether additional monetary stimulus was needed, not least to push up the chronically low rate of inflation in the euro area.
The disappointing credit data will provide additional ammunition for taking more action, analysts said.
Overall money supply data also fell short of expectations, with the money supply growing by 4.9 percent in September, the same rate of change as in August.
- Disappointing data -
Analysts had been expecting a modest pick-up.
The ECB regards M3 money supply as a barometer for future inflation.
"All in all, the September money supply and credit growth data are disappointing," said BayernLB economist Johannes Mayr.
Just a week ago, another ECB survey -- the quarterly bank lending survey -- had suggested that Europe's battered financial sector is on the mend, with banks easing credit standards and demand for loans increasing.
But the latest data "did not confirm this," Mayr said.
"Doubts are now increasing about credit growth in the fourth quarter," he said, arguing that external economic uncertainties, such as the slowdown in China, were dampening investors' appetite for loans.
IHS Global Insight analyst Howard Archer also felt the latest numbers were "very disappointing" for the ECB.
"It may well be that businesses have become more cautious over borrowing recently given heightened uncertainties over the global growth outlook," he said.
"The marked relapse in bank loans to businesses in September supports the case for the ECB to press ahead with further stimulus in December," Archer said.