Households and non-financial corporations in the euro area: second quarter of 2018

Chart 2. NFC gross-operating surplus, non-financial investment and financing

(annual growth rates)

Households

The annual growth rate of household gross disposable income increased to 3.4% in the second quarter of 2018, from 2.9% in the previous quarter. Gross operating surplus and mixed income from the self-employed increased at an unchanged annual rate of 2.6%, while the compensation of employees grew at a higher rate of 4.2% compared with 3.8% in the previous quarter. Household consumption expenditure grew at a higher rate of 3.0% (after 2.8%).

The household gross saving rate in the second quarter of 2018 was 12.0%, compared with 12.1% in the same quarter of the previous year.

The annual growth rate of household gross non-financial investment (which refers mainly to housing) increased to 8.0% in the second quarter of 2018, from 5.9% in the previous quarter. Loans to households, the main component of household financing, increased at a broadly unchanged rate of 3.1%.

The annual growth rate of household financial investment decreased to 1.8% in the second quarter of 2018, from 2.0% in the previous quarter. Among its components, currency and deposits grew at a higher rate of 3.8% (after 3.3%). Investment in life insurance and pension schemes grew at an unchanged rate of 2.2%, while shares and other equity grew at a lower rate of 1.1% (after 1.8%). Households continued to sell debt securities (in net terms), albeit at a lower rate than in the previous quarter (-10.1% after -11.6%).

The annual growth rate of household net worth increased to 5.0% in the second quarter of 2018, from 4.1% in the previous quarter, as larger valuation gains on non-financial assets, and to a lesser extent lower incurrence of liabilities, were only partially offset by holding losses in financial assets. The value of housing wealth increased at a higher rate of 7.1% after 5.6%in the previous quarter.

The household debt-to-income ratio^[1] continued to decrease, to 93.7% in the second quarter of 2018 from 94.1% in the second quarter of 2017, as disposable income grew faster than the outstanding amount of loans to households.

Non-financial corporations

The annual growth rate of non-financial corporations' gross operating surplus decreased to 4.2% in the second quarter of 2018, from 4.9% in the previous quarter, while net property income (defined in this context as property income receivable minus interest and rent payable) increased. In relation with the decline in operating surplus growth, gross entrepreneurial income (broadly equivalent to cash flow) increased at a lower rate of 5.1% (after 5.7%).^[2] Net value added increased at a lower rate of 4.2% (after 4.9%). The annual growth rate of gross non-financial investment increased to 1.4%, after a decline in the previous quarter (-1.1%). Financing of non-financial corporations increased at a broadly unchanged rate of 1.4%; loan financing grew at an unchanged rate of 2.1%. The latter is the result of different dynamics: a broadly unchanged annual growth rate of loans received from resident sectors other than MFIs, a net reduction in loans from the rest of the world and an increase in the annual growth rate of loans received from MFIs.^[3]

The annual growth rate of issuance of debt securities increased to 5.2% in the second quarter of 2018, from 4.9% in the previous quarter, while trade credit financing also grew at a higher rate (5.3%, after 4.5%). Equity financing grew at a lower rate of 0.5% (after 0.7%).

Non-financial corporations' debt-to-GDP ratio decreased to 137.0% in the second quarter of 2018, from 138.7% in the second quarter of 2017.

Financial investment grew at an unchanged rate of 2.9% compared with the previous quarter. Among its components, loans granted grew at a lower rate (2.2% after 3.6%), while investment in shares and other equity grew at a broadly unchanged rate of 1.8%.

Annexes

• Tables
• Charts

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Notes

• The annual growth rate of non-financial transactions and of outstanding assets and liabilities (stocks) is calculated as the percentage change between the value for a given quarter and that value recorded four quarters earlier. The annual growth rates used for financial transactions refer to the total value of transactions during the year in relation to the outstanding stock a year before.
• Hyperlinks in the main body of the press release are dynamic. The data therefore change with subsequent data releases as a result of revisions. Figures shown in annex tables are a snapshot of the data as at the time of the current release.

1. Calculated as loans/gross disposable income. ↑

2. Gross entrepreneurial income is the sum of gross operating surplus and property income receivable minus interest and rent payable. ↑

3. Loan financing comprises loans granted by all sectors (in particular MFIs, non-MFI financial institutions and loans from other non-financial corporations) and by creditors that are not resident in the euro area. ↑