ECB: Household Financial Investment Grows by 2.1% in Q2 2024, While Non-Financial Corporations’ Financing Increases by 1.0% and Gross Operating Surplus Declines by 3.5%

• Households’ financial investment increased at higher annual rate of 2.1% in second quarter of 2024, after 1.9% in previous quarter
• Non-financial corporations’ financing grew at higher annual rate of 1.0% (after 0.8%)
• Non-financial corporations’ gross operating surplus decreased more slowly at annual rate of ‑3.5% (after -4.2%)

Data for household financing and financial and non-financial investment

Data for NFC gross-operating surplus, non-financial investment and financing

Households

Household gross disposable income increased in second quarter of 2024 at a lower annual rate of 4.8%, after 6.1% in the first quarter of 2024. The compensation of employees grew at a lower rate of 5.5% (after 6.0%), and gross operating surplus and mixed income of the self-employed increased at a lower rate of 4.6% (after 5.9%). Household consumption expenditure grew at a lower rate of 3.1% (after 4.2%).

The household gross saving rate increased to 14.9% in the second quarter of 2024, compared with 14.5% in the previous quarter.

Household gross non-financial investment (which refers mainly to housing) decreased at a lower annual rate of -1.7% in the second quarter of 2024 (after -3.2% ). Loans to households, the main component of household financing, increased at an unchanged rate of 0.5%.

Household financial investment increased at a higher annual rate of 2.1% in the four quarters to the second quarter of 2024, after 1.9% in the four quarters to the first quarter of 2024. Among its components, currency and deposits grew at a higher rate of 2.3% (after 1.5%), while investment in debt securities increased at a lower rate (28.1% after 40.2%). Investment in shares and other equity grew at a higher rate of 0.3% (after 0.0%). This was due to unlisted shares and other equity decreasing more slowly (-0.3% after -0.9%), while investment fund shares grew at a broadly unchanged rate (1.9%). Investment in listed shares decreased faster (-0.9% after -0.6%). Life insurance decreased at a broadly unchanged rate (-0.2%) and pension schemes grew at a lower rate (2.2% after 2.4%).

Household net worth increased at an annual rate of 2.8% in the second quarter of 2024, after 2.1% in the previous quarter. Net financial and non-financial assets grew due to valuation gains in addition to investments. Housing wealth, the main component of non-financial assets, increased (0.5%) after decreasing in the previous quarter (-1.3%). The household debt-to-income ratio decreased to 83.1% in the second quarter of 2024 from 87.5% in the second quarter of 2023.

Non-financial corporations

Net value added by NFCs grew at a higher annual rate of 1.6% in the second quarter of 2024 (after 1.2% in the previous quarter). The negative growth rate of gross operating surplus decreased (-3.5% after -4.2%), while the growth rate of net property income – defined in this context as property income receivable minus interest and rent payable – increased (4.2% after 0.7%). As a result gross entrepreneurial income (broadly equivalent to cash flow) decreased at a lower rate of -1.3% (after ‑3.7%).^[1]

NFCs’ gross non-financial investment decreased at a faster annual rate of -7.0% (after -5.8% in the previous quarter).^[2] NFCs’ financial investment grew at a higher rate of 2.2% (after 1.9%) in the four quarters to the second quarter of 2024. Among its components, currency and deposits grew at a higher rate (2.5% after 0.4%), while loans granted increased at a lower rate (3.8% after 4.2%). Investment in shares and other equity grew at an unchanged rate of 1.6%.

Financing of NFCs increased at a higher annual rate of 1.0% (after 0.8%), as financing via debt securities (3.1% after 2.2%), shares and other equity (0.8% after 0.4%) and trade credits (2.1% after 0.4%) all grew at higher rates. Loan financing grew at a lower rate of 0.8% (after 1.2%).^[3]

NFCs’ debt-to-GDP ratio (consolidated measure) decreased to 66.7% in the second quarter of 2024, from 69.2% in the same quarter of the previous year; the non-consolidated, wider debt measure decreased to 128.2% from 131.3%.

Source: European Central Bank
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