Whereas in previous months this moderation reflected a decline in the growth rate of household borrowing in an environment of rising mortgage lending rates throughout the euro area and a slowing increase in house prices in some regions, in February it was due to a moderation in the growth of loans to non-financial corporations.
Second, firms’ efforts to tackle their structural problems such as excess debt and labor are finally starting to show results. Large manufacturers’ profitability has improved considerably as a result of streamlining of business operations and restructuring of industries, although adjustment pressure remains at nonmanufacturers and small firms.