M4 rose 1.0 percent on the month in July, comfortably more than reversing June's unrevised 0.5 percent decline. Annual growth of the broad money aggregate increased from minus 0.3 percent to 0.6 percent, matching its rate seen in May. M4 lending similarly returned to positive growth rising 0.8 percent versus the end of the second quarter to reduce its yearly rate of decline from minus 0.9 percent to minus 0.2 percent, its best performance since September 2013.
Excluding intermediate other financial corporations M4 was up a smaller 0.9 percent from June, but this was still its ninth consecutive monthly increase. Compared with a year ago the adjusted aggregate expanded 3.7 percent, down a couple of ticks from last time. Similarly, adjusted lending also rose 0.5 percent on the month and was 2.3 percent higher on the year, a 0.5 percentage point increase versus June.
Elsewhere in the financial data, net secured lending climbed a solid Stg2.71 billion after a Stg2.67 billion increase last time while, at 68,760, mortgage approvals registered their highest level since February 2014. Record low mortgage rates continue to provide the housing market with significant support.
Overall, the July financial statistics are relatively upbeat and suggest that, in the aggregate, the UK economy is on course for another quarter of respectable growth.
M4 is the main broad measure of money supply in the UK. The central bank's preferred measure excludes economically irrelevant financial transactions.
M4 is similar to the M3 measure used in some other countries. M4 includes everything in M2 (also called the retail component of M4) plus other deposits with an original maturity of up to five years; other claims on financial institutions such as repos and bank acceptances; debt instruments issued by financial institutions including commercial paper and bonds with a maturity of up to five years. Understanding the role of money in the economy has always been an important issue for policymakers. And the pickup in broad money growth and decline in credit spreads over the past three years together with more recent financial market turbulence has made it a particularly pertinent issue. Monetary data can potentially provide important corroborative or incremental information about the outlook for inflation. Quantitative easing is essentially a policy aimed at boosting money supply.
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