Household saving rate decreases to 17.3% in the euro area

Business investment rate almost stable at 23.3%

The household saving rate in the euro area was at 17.3% in the third quarter of 2020, compared with 24.6% in the second quarter of 2020. Despite this considerable decrease, it is the second highest value since the beginning of the time series in 1999 and 4.4 percentage points higher than in the same quarter of the previous year.     

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

At the same time, the household investment rate in the euro area was 8.8% in the third quarter of 2020, recovering from 7.9% in the previous quarter.

In the third quarter of 2020, the business profit share increased from 39.0% to 39.6% in the euro area.

The business investment rate in the euro area remained almost stable at 23.3%, compared with 23.2% in the second quarter of 2020. The peaks of the investment rate of non-financial corporations observed in 2015Q2, 2017Q2, 2019Q2, 2019Q4 and 2020Q1 are related to large imports of intellectual property products reflecting globalisation effects.

Household saving rate and its components

The decrease of households’ saving rate by 7.3 percentage points is explained by a sharp recovery of their consumption (+13.9%), at a much higher rate than the recovery of households’ gross disposable income (+3.9%).

Household investment rate and its components

The quarterly increase of 0.9 percentages points in household’s investment rate is explained by a 15.1% rise in gross fixed capital formation, while the increase of their gross disposable income was much more modest.

Non-financial corporations profit share and its components

The increase of business profit share is explained by the recovery of business gross value added (+14.5%), at a faster rate than the recovery of compensation of employees (wages and social contributions) plus taxes less subsidies on production (+13.4%).

Non-financial corporations investment rate and its components

The slight increase of business investment rate is explained by the increase of business gross fixed capital formation (+14.9%), at a slightly faster rate than the recovery of business gross value added (+14.5%).