Lending to companies and households in the euro area fell the most on record in August, signaling that the economy is still struggling to recover from its longest-ever recession.

Loans to the private sector dropped 2 percent from a year earlier, the Frankfurt-based European Central Bank said today. That's 16th monthly decline and the biggest since the start of the single currency in 1999. Adjusted for loan sales and securitization, lending contracted 1.5 percent in August.

The ECB has pledged to keep interest rates at or below current levels to support the 17-nation euro economy, which expanded 0.3 percent in the three months through June after six quarterly contractions. ECB President Mario Draghi said this month that while there has been "substantial progress" in bank funding, non-financial corporations are still suffering from "weak loan dynamics."