Publication - HOUSEHOLD SECTOR REPORT 2016 Q3
Real household disposable income per capita (p.c.) continued increasing in 2016 Q3 for a ninth consecutive quarter, growing by 1.2% compared to 2.1% in 2016 Q2. Real disposable income has accumulated a recovery of 3.6% since reaching a low in 2013 Q2. This is equivalent to a gain in annual income of 690 EUR at current prices.
Key developments for euro area households in the third quarter of 2016
Except when otherwise stated, all growth figures in percentages refer to rates of growth on a year earlier of quarterly magnitudes per capita (p.c.), and all figures in EUR refer to the sum of per capita magnitudes cumulated over four quarters. The abbreviation p.p. denotes percentage points.
• Nominal disposable income p.c. increased by 1.6% in 2016 Q3 after 2.2% in the previous quarter. Accounting for the effect of the change in prices as measured by the private consumption deflator, real household disposable income p.c. increased by 1.2% in 2016 Q3, after 2.1% in 2016 Q2;
• Real household consumption grew by 1.2%, and has increased 2.9% over the last two years;
• Real compensation per employee grew by 1.0%, with similar growth for the last eight quarters;
• Total employment grew by 1.9%, the largest increase since 2008. This was mirrored by a steady decline in the unemployment rate to 9.9%, nearing a five-year low;
• Households saved EUR 2,440 p.c.; incurred liabilities amounting to EUR 500 p.c.; invested EUR 1,660 p.c. in non-financial assets (mainly housing); and acquired financial assets amounting to EUR 1,430 p.c.;
• Investment in financial assets showed lower net outflows from debt securities (EUR -280 p.c., after EUR -300 p.c. 2016 Q2), lower inflows into investment funds and equity (EUR 225 p.c., after EUR 350 p.c. in 2016 Q2), further increasing inflows into currency and deposits (EUR 820 p.c., after EUR 720 p.c. in 2016Q2) and somewhat larger inflows into life insurance and pension funds schemes (EUR 690 p.c., after EUR 670 in 2016 Q2);
• The household debt ratio decreased by 0.1% to 93.5% from the previous quarter;
• The net worth of households increased by EUR 5.940 p.c. in the four quarters to 2016 Q3. The increase was mainly driven by strong capital gains on non-financial assets (mainly housing stock), which contributed 3,700 EUR p.c., followed by financial investment, which added 1,430 EUR p.c
Commentary to the euro area charts
Except when otherwise stated, all growth figures in percentages refer to rates of growth on a year earlier of quarterly magnitudes per capita (p.c.), and all figures in EUR refer to the sum of per capita magnitudes cumulated over four quarters1 . The abbreviation p.p. denotes percentage points.
Chart 1
Real household disposable income per capita (p.c.) continued increasing in 2016 Q3 for a ninth consecutive quarter, growing by 1.2% compared to 2.1% in 2016 Q2. Real disposable income has accumulated a recovery of 3.6% since reaching a low in 2013 Q2. This is equivalent to a gain in annual income of 690 EUR at current prices. Current levels of disposable income have only now roughly reached their 2008 peak in real terms.
In nominal terms, the growth rate of household disposable income per capita changed to 1.6% from 2.2% in the previous quarter. Notwithstanding a decline in the contribution of direct taxes (-0.3 pp.), property income (-0.2 pp.) and net social transfers (-0.2 pp.), income growth was supported by a larger contribution from compensation of employees (+1.8 pp.) and gross operating surplus (+0.5 pp.).
Looking across countries, real disposable income grew at a rate exceeding the euro area’s 1.2% in Belgium (BE), Ireland (IE), Italy (IT), Portugal (PT), Slovenia (SI) and Spain (ES). Slower growth compared to the euro area as a whole was registered in Austria (AT), Finland (FI), Germany (DE) and Netherlands (NL), including a decline in Greece (GR). Over the last four years, real income grew on average by more than one and a half times the euro area rate in PT, IE and SI, and by less than half the euro area rate in AT, BE, FI, GR and NL.
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