By Todd Buell 

FRANKFURT--Lending to eurozone firms increased on the year at a faster pace in July than in the previous month, data from the European Central Bank showed Friday, offering additional evidence that the eurozone economy was resilient post-Brexit and potentially weakening the need for the ECB to pump more money into the economy at its next meeting.

Lending to eurozone firms increased 1.9% in annual terms in July after an increase of 1.7% in June. Lending to households grew 1.8%, matching the previous month's pace.

"The ECB will likely be pretty pleased with the July credit data, and it modestly dilutes the case for further stimulus" at the Sept. 8 policy meeting, wrote IHS Markit economist Howard Archer soon after the release.

"In sum, today's monetary figures confirm that on the financial end of the economy, things continue to move in the right direction, but at a very slow and increasingly fragile pace," said ING economist Teunis Brosens in a note.

The lending data follow other sentiment data published earlier this week that signaled resilience in the eurozone economy and pushed some commentators to say that the case for ECB action at its Sept. 8 meeting was no longer convincing.

Still, it may be too early to signal the all clear. On Thursday, other business sentiment indexes for France and Germany were worse than expected, suggesting that the U.K. vote and fears about terrorism were weighing on business confidence.

In monthly terms, lending also grew, with volumes for household loans increasing by EUR9 billion in July, after EUR16 billion in June, while company loans grew by EUR12 billion after EUR8 billion.

The data are the first of this series to fully encompass Britain's vote to leave the European Union, which took place on June 23. Last month, the ECB published a banking survey that said "no clear picture" had yet emerged on how banks assessed the impact of the U.K. referendum on lending conditions.

But the data also follow the central bank's allocation in June of loans in a targeted program designed to encourage banks to lend to the private sector. Under certain conditions banks are even effectively paid to lend.

The central bank's money supply indicator M3 saw 4.8% annual growth in July after 5.0% growth in June. Economists polled by The Wall Street Journal had expected growth of 4.9%. In three-month average terms, the rate was 4.9%.

The central bank's narrower M1 measure of money supply slowed to 8.4% in July from 8.7% in June. Economists say this figure is a key leading indicator of the business cycle. "M1 money growth is still decent, pointing to continuing moderate growth," said Mr. Brosens.

Write to Todd Buell at todd.buell@wsj.com

(END) Dow Jones Newswires

August 26, 2016 05:46 ET (09:46 GMT)

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