By David Barwick – FRANKFURT (Econostream) – Euro area firms reported a marked further tightening in bank lending conditions in the second quarter, while their expectations for selling prices, input costs and wages moderated, the European Central Bank said Monday.

A net 42% of firms reported higher interest rates on bank loans, up from 26% in the previous quarter, according to the ECB’s Survey on the Access to Finance of Enterprises (SAFE). A net 31% reported increases in other financing costs, while 10% cited higher collateral requirements.

Financing needs increased slightly, while bank loan availability was broadly unchanged overall. Availability improved for large firms, with a net 4% reporting an increase, but deteriorated for small and medium-sized enterprises, at a net -4%. The bank-loan financing gap consequently widened slightly to 3% from 2%.

Firms expected their selling prices to rise 3.2% over the next 12 months, down from 3.5% in the previous survey, while anticipated non-labor input-cost growth declined to 5.2% from 5.8%. Wage-growth expectations fell to 2.5% from 2.8%.

Median inflation expectations remained at 3.0% at both the one- and three-year horizons, while the five-year expectation edged up to 3.1% from 3.0%.

The survey covered 5,087 euro area firms and was conducted between May 21 and June 26.