European Household saving rate up to 21.5 % in the Euro Area – Business profit share increases to 41.2 %

The household saving rate in the euro area was at 21.5% in the first quarter of 2021, compared with 19.5 % in the fourth quarter of 2020. It is the second highest value since the beginning of the time series in 1999 (the highest was 25.0 % in the second quarter of 2020).

These data come from a first release of seasonally adjusted quarterly European sector accounts from Eurostat, the statistical office of the European Union.

In the first quarter of 2021, the business profit share increased from 40.8 % to 41.2 % in the Euro Area.

Household saving rate and its components

The increase of households’ saving rate in the euro area is explained by consumption falling by 1.2 % while households’ gross disposable income increased by 1.4 %.

Household investment rate and its components

The increase of household’s investment rate in the euro area is explained by a 2.0% rise in gross fixed capital formation, while gross disposable income increased also but at a lower rate (+1.4%).

Non-financial corporations profit share and its components

The increase of business profit share in the euro area by 0.4 percentage points is explained by the increase of business gross value added (+1.8%), while compensation of employees (wages and social contributions) plus taxes less subsidies on production increased by 1.2 %.

Compensation of employees and other taxes less subsidies on production. Gross value added.

Non-financial corporations investment rate and its components

The increase of business investment rate in the euro area by 0.5 percentage points is explained by the increase of business gross fixed capital formation (+4.1%), at a faster rate than the increase of gross value added (+1.8 %).

Geographical information

The euro area (EA19) consists of 19 Member States: Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland, plus the European Central Bank, the European Stability Mechanism and the European Financial Stability Facility.

Methods and definitions

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

The gross investment rate of households (household investment rate) 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. The gross investment rate of non-financial corporations is defined as gross fixed capital formation divided by gross value added. This ratio relates the investment of non- financial businesses in fixed assets (buildings, machinery etc.) to the value added created during the production process.

The profit share of non-financial corporations is defined as gross operating surplus divided by gross value added. This profitability-type indicator shows the share of the value added created during the production process remunerating capital. It is the complement of the share of wage costs (plus other taxes less other subsidies on production) in value added.

The compilation of the European sector accounts follows the European System of Accounts 2010 (ESA2010) and covers the period from the first quarter of 1999 onwards. The data comes from a first release of seasonally adjusted quarterly European sector accounts released by Eurostat, the statistical office of the European Union and the European Central Bank (ECB).

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. In the latter, to measure the external transactions of the euro area / European Union (EU), it is necessary to remove cross-border flows within the area concerned.

The method used for compilation is the same as for previous releases. However, these estimates are based on source data that are subject to revisions under the COVID-19 containment measures.

www.ec.europa.eu/eurostat/