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  • PRESS RELEASE
  • 4 July 2018

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

  • The annual growth of loans to households stood at an unchanged rate of 3.0% in the first quarter of 2018. Household financial investment increased at a lower rate of 1.9% (after 2.1% in the previous quarter), their non-financial investment (gross) increased at a lower rate of 5.7% (after 6.5%) and their net worth increased also at a lower rate of 4.7% (after 5.0%).
  • The annual growth rate of the gross operating surplus of non-financial corporations (NFCs) increased to 4.2% in the first quarter of 2018, from 3.6% in the previous quarter, while gross entrepreneurial income increased at a lower rate of 4.4% (after 6.1%). The annual growth rate of gross non-financial investment of NFCs decreased to 1.6% (from 3.6%), and their financing increased at a lower rate of 1.4% (after 2.0%).

Chart 1. Household financing and financial and non-financial investment

(annual growth rates)

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

(annual growth rates)

Households

The annual growth rate of household gross disposable income stood at an unchanged rate of 3.0% in the first quarter of 2018. Gross operating surplus and mixed income from the self-employed increased at a broadly unchanged rate of 3.3%, while the compensation of employees grew at a higher rate of 3.9% (after 3.7% in the previous quarter). Household consumption expenditure grew at an unchanged rate of 2.8%.The household gross saving rate in the first 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) decreased to 5.7% in the first quarter of 2018, from 6.5% in the previous quarter. Loans to households, the main component of household financing, increased at an unchanged rate of 3.0%.

The annual growth rate of household financial investment decreased to 1.9% in the first quarter of 2018, from 2.1% in the previous quarter. Among its components, currency and deposits grew at an unchanged rate of 3.3%, investment in life insurance and pension schemes grew at an unchanged rate of 2.1%, while shares and other equity grew at a higher rate of 2.0% (after 1.8%). Investment in debt securities continued to decline at a higher rate of -12.1% (after -11.0%).

The annual growth rate of household net worth decreased to 4.7%, from 5.0% in the previous quarter, as larger valuation gains on non-financial assets, and to a lesser extent lower incurrence of liabilities, were offset by lower investment in financial and non-financial assets, and by lower holding gains in financial assets. The household debt-to-income ratio continued to decrease, to 93.7% in the first quarter of 2018 from 94.0% in the first quarter of 2017, as disposable income grew faster than the outstanding amount of loans to households. The value of housing wealth increased in the first quarter of 2018 at a higher rate of 6.4% (after 6.0%).

Non-financial corporations

Net value added increased at a lower rate of 4.7% in the first quarter of 2018 (after 4.9% in the previous quarter). The annual growth rate of non-financial corporations' gross operating surplus increased to 4.2% in the first quarter of 2018 (after 3.6%), while the growth rate of net property income (defined in this context as property income receivable minus interest and rent payable) decreased. As a result gross entrepreneurial income (broadly equivalent to cash flow) increased at a lower rate of 4.4% (after 6.1%).[1]

The annual growth rate of gross non-financial investment decreased 1.6% (from 3.6%). Financing of non-financial corporations increased at a lower rate of 1.4% (after 2.0%). Loan financing grew at a lower rate of 1.9% (after 2.8%). This reflects a decrease in the annual growth rate of loans received from resident sectors other than MFIs and a net reduction in loans from the rest of the world, while the annual growth rate of loans received from MFIs increased. The annual growth rate of issuance of debt securities decreased to 4.8% in the first quarter of 2018, from 5.2% in the previous quarter, while trade credit financing grew at a lower rate of 3.9% (after 4.5%). Equity financing grew at a lower rate of 0.7% (after 1.1%). NFCs' debt-to-GDP ratio decreased to 133.1% in the first quarter of 2018, from 136.1% in the first quarter of 2017.

Financial investment grew at a lower rate of 2.7% (after 3.7% in the previous quarter). Among its components, loans granted grew at a lower rate of 3.3% (after 4.4%), while investment in shares and other equity grew at a broadly unchanged rate of 1.7%.

Annexes to the press release on households and non-financial corporations in the euro area

For media queries, please contact Esther Tejedor, tel.: +49 69 1344 95596.

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.
  • The hyperlinks in the main body of the press release are dynamic. The data they lead to may therefore change with subsequent data releases as a result of revisions. Links to tables provided in the annex refer to a snapshot of the data as at the time of the current release.
  1. [1]Gross entrepreneurial income is the sum of gross operating surplus and property income receivable minus interest and rent payable.
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