Households’ financial investment increased at higher annual rate of 3.5% in third quarter of 2020, compared with 3.2% one quarter earlier
Non-financial corporations’ financing increased at higher annual rate of 2.1% in third quarter of 2020, compared with 1.9% one quarter earlier
Non-financial corporations’ gross operating surplus decreased at lower annual rate (-6.9%) in third quarter of 2020, compared with -19.3% one quarter earlier
Households
The annual growth rate of household gross disposable income increased to 1.1% in the third quarter of 2020 (after -2.9% in the previous quarter). Gross operating surplus and mixed income of the self-employed decreased at a lower rate (-1.1% after -7.3%), as well as compensation of employees (-1.6% after -7.7%). Similarly, household consumption expenditure declined at a lower annual rate (-4.1% after -15.4%).
The household gross saving rate in the third quarter of 2020 was 17.6%, compared with 16.5% in the previous quarter. The continued high savings rate in these last two quarters, calculated from four-quarter cumulated sums, is mainly explained by the strong increase of household saving in the second quarter of 2020.
Household gross non-financial investment (which refers mainly to housing) decreased at a lower rate (-2.2%) in the third quarter of 2020 (-14.8% 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 increased to 3.5% in the third quarter of 2020, from 3.2% in the previous quarter. Among its components, currency and deposits grew at a higher rate of 7.0% (after 6.4%), and investment in shares and other equity grew at a higher rate of 2.4% (after 1.9%). Investment in life insurance and pension schemes grew at a lower rate of 1.5% (after 1.9%). Disinvestment in debt securities continued on an annual basis, albeit at a lower rate (-4.3% after -10.2%).
The annual growth rate of household net worth was broadly unchanged at 3.9% in the third quarter of 2020. This was due to an increase in the value of housing wealth (4.8%, after 4.5% in the previous quarter) combined with net purchases of financial and non-financial assets, which together exceeded the increase in liabilities and net valuation losses on financial assets. The household debt-to-income ratio increased to 95.6% in the third quarter of 2020 from 93.5% in the third quarter of 2019, as loans to households grew faster than disposable income.
Non-financial corporations
Net value added by NFCs decreased at a lower annual rate in the third quarter of 2020 (-7.3% after -21.6% in the previous quarter). Gross operating surplus declined by -6.9% year-on-year after -19.3% in the previous quarter. 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) decreased at a lower rate (-7.2% after -24.2%).[1]
The annual growth rate of NFC gross non-financial investment decreased at a lower rate (-14.2% after -28.8%).[2] Financing of NFCs increased at a higher rate of 2.1% (after 1.9%), as equity financing grew at a higher rate of 1.4% (after 1.2%), and trade credit financing decreased at a lower rate (-3.1% after -4.9%). Loan financing grew at a broadly unchanged rate of 3.4%.[3] The issuance of debt securities by NFCs grew at a broadly unchanged rate of 10.3% in the third quarter of 2020.
NFCs’ debt-to-GDP ratio (consolidated measure) increased to 84.3% in the third quarter of 2020, from 79.2% in the same quarter of the previous year; the non-consolidated, wider debt measure increased to 146.7% from 139.3%. The increases in these ratios were due to an increase in the debt of NFCs and a decline in GDP over this period.
NFC financial investment grew at an annual rate of 3.2% in the third quarter of 2020, compared with 2.8% in the previous quarter. Among its components, currency and deposits increased at a higher rate of 20.3% (after 18.3%), and loans granted grew at a higher rate of 1.3% (after 0.8%), while investment in shares and other equity grew at an unchanged rate of 2.2%.
