Today ECB released the latest (April) monetary developments statistics.
After increasing €77bn and €60bn in February and March, M3 dropped €51bn in April, a drop of 0.5% in a single month. Credit to euro area residents also fell €55bn, mainly due to a decrease of €49bn in credit to the private sector (while the government sector also moved to a negative flow of €6bn, after an increase of €34bn in March).
Financial intermediaries decreased their deposits by €50bn (5% of deposits) and non-financial corporations by €12bn. Households kept a positive flow of €15bn, much lower than the Feb/March numbers.
On the loan side, financial intermediaries and insurance corporations posted a significant drop in issuance of €30bn (2,6% of outstanding amount) and €7bn respectively. Non-financial corporations did increase their loans by €10bn (compared with a €8bn drop in March), though this can be attributed only to a large flow in loans up to 1 year, while long-term loans (over 5 years) dropped €10bn. This should probably be interpreted as corporations using credit for short-term needs (especially given their deposit drop) while lowering long-term investment projects. Households loan monthly flow was steady at €7bn.
Overall, it seems that financial corporations are moving out of Europe in speed while non-financial corporations face a stressed environment and try to hedge their exposure by lowering their investment and taking advantage of short-term funding opportunities to close any liability holes. Although the swing in the real sector (households, non-financials) is not that large yet, the intermediaries capital flight will probably lower monetary velocity and make funding conditions even harder. In general, the data are quite consistent with latest economic observations (PMI, ECB balance sheet statements) showing a mild (for now) recession and deepening capital flight for the Eurozone.