Quarterly Sector Accounts: first quarter of 2012 Household saving rate nearly stable at 13.3% in the euro area and 11.6% in the EU27 Household real disposable income increased by 0.2% in the euro area

STAT/12/114

1 August 2012

Quarterly Sector Accounts: first quarter of 2012
Household saving rate nearly stable at 13.3% in the euro area and 11.6% in the EU27
Household real disposable income increased by 0.2% in the euro area

In the first quarter of 2012 compared with the fourth quarter of 2011, the household saving rate and the household investment rate remained almost stable in both the euro area (EA17) and the EU27. In the euro area, household disposable income increased by 0.2% in real terms, after falling by 0.5% in the previous quarter.

These data come from a detailed set of seasonally adjusted1 quarterly European sector accounts2 released by Eurostat, the statistical office of the European Union and the European Central Bank (ECB).

Household saving rate nearly stable in both zones

In the first quarter of 2012, the gross saving rate3 of households was 11.6% in the EU274, compared with 11.5% in the fourth quarter of 2011. In the euro area5, the household saving rate was 13.3% in the first quarter of 2012, unchanged compared with the previous quarter.

Household saving rate (seasonally adjusted)

Household real income and consumption up in the euro area

In the euro area, the household saving rate remained stable due to real final consumption expenditure
increasing at the same pace (+0.2%) as real gross disposable income6. The latter increased due to nominal income increasing more (+0.7%) than consumption prices (+0.5%).

Real growth of household gross disposable income and final consumption expenditure (euro area)

(seasonally adjusted data, change compared with the previous quarter)

The increase in household nominal disposable income (+0.7%) was the result of the positive contributions of net property income and other transfers (+0.5 pp), compensation of employees (+0.2 pp) and social benefits (+0.1 pp), while taxes and social contributions contributed negatively (-0.1 pp).

Contributions of components to the growth of nominal household gross disposable income

(euro area)

(seasonally adjusted data, change compared with the previous quarter)

Household investment rate remained at low levels in both zones

In the EU27, the gross investment rate of households7 was 8.3% in the first quarter of 2012, compared with 8.4% in the previous quarter. It was 9.0% in the euro area, compared with 9.1% in the previous quarter.

Household investment rate (seasonally adjusted)

In the euro area, the slight decrease of the investment rate was due to household investment (gross fixed capital formation, mostly in dwellings) falling (-0.6%) while nominal disposable income grew (+0.7%).

Nominal growth of household gross disposable income and gross fixed capital formation (euro area)

(seasonally adjusted data, change compared with the previous quarter)

• Seasonal adjustment has been performed using the Tramo-Seats method. The seasonally adjusted series are built up indirectly as the sum of seasonally adjusted components.

• Institutional sectors bring together economic units with broadly similar characteristics and behaviour, namely: households (including non-profit institutions serving households), non-financial corporations, financial corporations, government and the rest of the world.

• The gross saving rate of households is defined as gross saving divided by gross disposable income, with the latter being adjusted for the change in the net equity of households in pension funds reserves. Gross saving is the part of the gross disposable income, after the latter adjustment, which is not spent as final consumption expenditure. Therefore, saving rate increases when gross disposable income grows at a higher rate than final consumption expenditure.

• The European Union (EU27) consists of 27 Member States: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom plus the European Central Bank and the EU institutions.

• The euro area (EA17) consists of 17 Member States: Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland plus the European Central Bank.

• The real gross disposable income of households is defined as the nominal gross disposable income of households divided by the deflator (price index) of household final consumption expenditure.

• The gross investment rate of households is defined as gross fixed capital formation divided by gross disposable income, with the latter being adjusted for the change in the net equity of households in pension funds reserves. Household investment mainly consists of the purchase and renovation of dwellings.

Methodological information

The compilation of the European sector accounts follows the European System of Accounts (ESA 95) and covers the period from the first quarter of 1999 to the first quarter of 2012. The European sector accounts are not a simple sum of the data of individual countries. There are six specific compilation steps: (1) conversion to euro, (2) estimation of missing countries,
(3) incorporation of the European institutions, (4) estimation of the flows between the euro area / EU and third countries,
(5) balancing of the accounts and (6) seasonal adjustment of key series.

Due to the conversion to euro, the growth rates of EU aggregates may be affected by movements in exchange rates and should be viewed with caution. For this reason, nominal growth rates (bar charts and table 3) are provided for the euro area only. However, there is hardly any impact on ratios such as saving and investment rates.

The rest of the world accounts, as compiled by Member States, record transactions between the national economy and all non-resident units, including those in other EU Member States. To measure the external transactions of the euro area / EU, it is necessary to remove cross-border flows within the area concerned. Imbalances between intra-imports and intra-exports, called “asymmetries”, are then eliminated. Currently, intra-flows and resulting asymmetries are not removed in the other domains of national accounts of Eurostat. Therefore, European sector accounts are internally consistent but have discrepancies with other national accounts data.

For detailed data and methodology, please see Eurostat's website at: http://ec.europa.eu/eurostat/sectoraccounts and ECB's website at: http://www.ecb.eu/stats/acc/html/index.en.html.

Release and revision policy

The quarterly news releases are published four months after each quarter. The next release will take place on 30 October 2012.

The whole time series are revised every quarter. Compared with News Release 65/2012 of 30 April 2012, the household saving rate for the fourth quarter of 2011 has been revised from 13.7% to 13.3% in the euro area and from 11.8% to 11.5% in the EU27. The household investment rate has been revised from 9.2% to 9.1% in the euro area and remains unchanged at 8.4% in the EU27. The growth rate of euro area household real disposable income was revised from -0.4% to -0.5%.

The ECB and Eurostat publish integrated non-financial and financial accounts, including financial balance sheets, for the euro area. Eurostat also publishes the non-financial accounts of the European Union.

Eurostat's website includes detailed annual sector accounts by country and derived key indicators, which also include the indicators that combine non-financial and financial accounts such as debt-to-income ratios.

The full set of quarterly sector accounts is published for euro area / EU27 aggregates only. However, a subset of quarterly key indicators is published 105 days after each quarter at http://ec.europa.eu/eurostat/sectoraccounts (see "Quarterly data") for 15 out of the 18 members of the European Economic Area (EEA) whose GDP is above 1% of the EU27 total. The other 12 EEA members, whose GDP is below 1% of the EU27 total, do not have to transmit the quarterly accounts of households to Eurostat.

Selected Principal European Economic Indicators: http://ec.europa.eu/eurostat/euroindicators

Table 1: Key indicators of the euro area (EA17) and of the European Union (EU27)

Table 2: Household gross disposable income and its components, final consumption expenditure and gross fixed capital formation, in the euro area (EA17)

(Millions of euro at current prices, seasonally adjusted)

Table 3: Household gross disposable income and its components, final consumption expenditure

and its deflator and gross fixed capital formation, in the euro area (EA17)

(seasonally adjusted, percentage change compared to the previous quarter)

* The contribution 'C' of an element 'E' to the growth of an aggregate 'A' between T-1 and T is CT = (ET - ET-1) / AT-1. It is also equal to the growth rate of the component (ET - ET-1)/ET-1 multiplied by its share in the aggregate at the previous period ET-1/AT-1.

** Deflator for the seasonally adjusted final consumption expenditure of households (including non-profit institutions serving households) which has also been used to deflate gross disposable income.