In the third quarter of 2009, in both the Eurozone (EA16) and the EU27, the seasonally adjusted household saving rate decreased and the household investment rate was almost unchanged. The Eurozone savings rate was 15.8% compared with 4.5% in the US in November 2009 up from below zero in 2005 and a Japanese savings rate of about 2%, impacted by an ageing population and over a third of the workforce on temporary contracts, down from over 10% a decade ago.
The Irish savings rate was estimated at 10% in 2009, up from 3% in 2007.
National Irish Bank said that 2009 has seen Irish private savings rise to remarkable levels - estimated to be 10% of disposable income - up from a low of 3% in 2007.
Americans’ personal savings rate dipped into negative territory in 2005, something that hadn’t happened since the Great Depression.
The savings rate has been negative for an entire year only twice before — in 1932 and 1933 — two years when the country was struggling to cope with the Great Depression, a time of massive business failures and job layoffs.
The US rate was 8.4% in 1952; 9.4% in 1970; about an average of 10% in 70's and 80's and 1.8% at the end of 2008.
In 1960-1990, the savings rate averaged 16% in Japan and had fallen to 4% in 2000.
In both of Europe's zones, Eurostat said today that the business investment rate and the profit share grew in the third quarter.
These data come from a detailed set of quarterly European sector accounts released by Eurostat, the statistical office of the European Union, and the European Central Bank (ECB).
Household saving rate down for the first time since first quarter 2008
In the third quarter of 2009, the seasonally adjusted gross saving rate of households was 13.7% in the EU27 compared with 14.2% in the second quarter of 2009. In the Eurozone, the household saving rate was 15.8% in the third quarter of 2009, compared with 16.2% in the previous quarter.
In the Eurozone, the decrease in the household saving rate was caused by real disposable income falling (-0.1%), while real final consumption expenditure grew (0.5%).
The gross saving rate of households is defined as gross saving divided by gross disposable income, with the latter being adjusted for 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, saving rate increases when gross disposable income grows at a higher rate than final consumption expenditure.
The real gross disposable income of households is defined as the nominal gross disposable income of households (adjusted for the change in the net equity of households in pension funds reserves) divided by the deflator (price index) of household final consumption expenditure.
Household investment rate stabilises in both zones
In the EU27, the gross investment rate of households was 8.3% in the third quarter of 2009, compared with 8.2% in the second quarter of 2009. In the Eurozone, the household investment rate was 9.1% in the third quarter of 2009, compared with 9.0% in the previous quarter.
In the Eurozone, the slight increase in the household investment rate was due to gross fixed capital formation (investment, mostly in dwellings) growing faster in nominal terms (1.7%) than nominal disposable income (0.2%).
Business investment rate up for the first time since third quarter 2008
In the EU27, the gross investment rate of non-financial corporations was 21.1% in the third quarter of 2009, compared with 20.7% in the second quarter of 2009. In the Eurozone, the investment rate was 21.3% in the third quarter of 2009, compared with 20.7% in the previous quarter.
In the Eurozone, the increase in the gross investment rate of non-financial corporations was due to gross fixed capital formation (investment) growing faster (5.1%) than value added (2.4%). As for stocks, total inventories of materials, supplies and finished goods decreased for the third quarter in a row.
Business profit share up in both zones
In the EU27, the gross profit share9 of non-financial corporations was 37.2% in the third quarter of 2009, compared with 35.8% in the second quarter of 2009. In the Eurozone, the profit share was 37.7% in the third quarter of 2009, compared with 36.4% in the previous quarter.
In the Eurozone, the gross profit share of non-financial corporations increased due to value added growing faster (2.4%) than compensation of employees (wage costs) plus taxes less subsidies on production (0.4%).
The European Union (EU27) consists of 27 Member States: Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom plus the European Central Bank and the EU institutions.
The Eurozone (EA16) consists of 16 Member States: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland plus the European Central Bank.
