The annual growth rate of gross fixed capital formation of non-financial corporations in the euro area increased to 6.3% in the fourth quarter of 2010, from 4.0% in the previous quarter. The annual growth rate of net entrepreneurial income of non-financial corporations was 12.8% in the fourth quarter, after 8.3% in the previous quarter. The annual growth rate of financing of non-financial corporations was 2.4% in the fourth quarter, compared with 2.3% the previous quarter, and the annual growth rate of their financial investment remained broadly unchanged at 3.8% in the fourth quarter of 2010 (2010Q3 :3.9%).
Total euro area economy
The annual growth rate of euro area net disposable income remained broadly unchanged at 3.1% in the fourth quarter of 2010 (2010q3: 3.0%). Euro area gross fixed capital formation increased by 2.8% annually (2010q3: 2.1%), due to higher growth by corporations and households. The growth rate of gross capital formation4 decreased slightly to 5.7% in the fourth quarter (2010q3: 5.9%).
Investment growth and the growth of gross saving were broadly unchanged in the fourth quarter of 2010 from the previous quarter. An increase in the growth of government gross saving was largely compensated by the continued decline in households’ gross saving as well as a drop in the annual growth of foreign savings.
Households
The annual growth rate of households’ gross disposable income remained broadly unchanged at 1.8% in the fourth quarter of 2010 (after 1.9% previously). The slight decrease occurred despite an increase in the growth rate of compensation of employees, and was partly due to increasing tax payments and declining net social transfers.
The annual growth rate of households’ consumption expenditure (3.3%) exceeded the annual growth rate of households’ gross disposable income which implied a continued decline in gross saving(-7.0% after -7.8% previously). The annual rate of change of gross fixed capital formation of households increased to 3.1% in the fourth quarter, compared with 0.8% in the previous quarter. The four-quarter moving average households’ gross saving rate was 13.8% (compared with 15.2% in the fourth quarter of 2009).
The annual growth rate of financing of households remained broadly unchanged at 2.8% in the fourth quarter of 2010 (2010q3: 2.9%). The annual growth rate of households’ gross non-financial investment was 3.4%, up from 1.9% in the previous quarter whilst that of financial investment was 2.7% compared with 2.8% previously.
Turning to the components of households' financial investment, the annual growth rate of their holdings of currency and deposits remained unchanged at 2.8% in the fourth quarter of 2010(2010q3: 2.8%). The annual growth rate of their investment in debt securities was -1.6% in the fourth quarter (2010q3: -2.3%), while the investment in shares and other equity was 0.7% in the fourth quarter (2010q3: 0.8%). The annual growth rate of households’ additions to life insurance and pension fund reserves decreased to 4.6% in the fourth quarter (2010q3: 4.9%).
Developments in households’ balance sheets were dominated by valuation changes of their nonfinancial assets. Growth of households’ net worth was 4.0% in the fourth quarter of 2010 (2010q3:3.8%). The annual growth rate of housing wealth was 4.0% (2010q3: 3.7%), whereas the growth rate of the market value of households’ holdings of shares and other equity was 4.9% in the fourth quarter of 2010 (2010q3: 2.0%).
Non-financial corporations
The annual growth rate of net entrepreneurial income of non-financial corporations was 12.8% in the fourth quarter of 2010, up from 8.3% in the previous quarter. The annual growth rate of net value added was 4.3% (2010q3: 3.5%.) Gross fixed capital formation of non-financial corporations increased with an annual growth rate of 6.3% in the fourth quarter of 2010, after 4.0% in the previous quarter. The annual growth rate of total gross nonfinancial investment, which also includes inventories, was 13.2%, up from 11.1% in the previous quarter.
In the fourth quarter of 2010, the annual growth rate of financing of non-financial corporations remained broadly unchanged at 2.4% (2010q3: 2.3%). The growth rate of their loan financing amounted to 2.0%, down from 2.2% in the previous quarter. The annual growth rate of their issuance of debt securities was 7.7% (2010q3: 8.6%). The annual growth rate of their equity financing, via the issuance of quoted and unquoted shares and other equity, increased to 2.0% (2010q3: 1.7%).
Financial investment of non-financial corporations increased at an annual rate of 3.8% in the fourth quarter (2010q3: 3.9%). The annual growth rate of investment in currency and deposits increased to 3.0%, after 2.5% previously. The growth rate of loans granted decreased to 9.2% in the fourth quarter of 2010 (2010q3: 9.5%). The growth rate of their investment in shares and other equity increased to 2.2% (2010q3: 1.2%).
Insurance corporations and pension funds
The annual growth rate of insurance technical reserves, the major financing instrument of insurance corporations and pension funds, decreased to 4.4% in the fourth quarter of 2010, compared to 5.0% in the third quarter. The annual growth rate of their financial investment decreased to 3.5% from 4.3% in the previous quarter. The growth rate of their investment in debt securities remained broadly unchanged at 6.2% (2010q3: 6.1%), whilst that of their investment in shares and other equity decreased to 2.0%, from 4.7% in the previous quarter.
