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Sector-specific review on the data for the third quarter of 2017

Saving rate of the households sector was negative in the third quarter of 2017

The disposable income of households grew in the third quarter of 2017 by 3.3 per cent (around EUR 900 million) compared to the corresponding quarter in 2016. The key components of disposable income on the income side are wages and salaries received, entrepreneurial income and property income, and social benefits received. The biggest individual expense items are taxes paid and social contributions.

Compared to the figures one year ago, disposable income grew mainly due to a growth of EUR 0.3 billion in social benefits received and an estimated increase of around EUR 0.3 billion in entrepreneurial income, while property income diminished by about ER 0.1 billion from one year ago. Of expenses, income taxes paid fell by nearly EUR 0.3 billion, while no significant changes took place in the other expense items compared to the corresponding quarter of the previous year. Interest income diminished further, but interest expenses grew somewhat. Consumption expenditure grew by nearly EUR 900 million compared with the corresponding quarter last year.

When received social benefits in kind are added to the disposable income of households, the household adjusted disposable income is derived, which is the indicator recommended by the OECD for measuring economic well-being. Social benefits in kind refer to education, health and social services produced by general government and non-profit institutions serving households. In the third quarter of 2017, adjusted disposable income grew at current prices by 2.5 per cent and adjusted for price changes by 2.2 per cent from the corresponding quarter of the year before. The volume indicator describing the development of adjusted disposable income adjusted for price changes can be found in Appendix table 3 of this publication.

Households' seasonally adjusted saving rate was -1.3 per cent in the third quarter of 2017. In the previous quarter, the saving rate stood at -1.2 per cent. The saving rate is derived by deducting consumption expenditure from disposable income. The saving rate is negative if households' consumption expenditure is higher than their disposable income. Households' seasonally adjusted investment rate was 12.2 per cent of disposable income in the third quarter of 2017, which was the same as the corresponding data of the previous quarter. Most of households' investments were investments in dwellings.

Compensation of employees paid by non-profit institutions serving households decreased by around four per cent compared with the quarter of one year ago.

In these statistics, the households sector covers only the actual households sector S14. Sector S15, non-profit institutions serving households, is calculated and published separately. In Eurostat’s publication, the households sector also includes the data for sector S15. Another difference to Eurostat's publication is in how consumption of fixed capital is taken into account. Eurostat publishes investment and saving rates as gross figures. Net data are used in these statistics, that is, when consumption of fixed capital is taken into account, saving and investment rates decrease.

Profits in the non-financial corporations sector grew from the previous quarter

In the third quarter of 2017, the seasonally adjusted profit share of non-financial corporations grew to 31.1 per cent from the previous quarter's 29.4 per cent. The profit share refers to the share of the operating surplus in value added. The profit share grew because value added in the non-financial corporations sector grew clearly and compensation of employees paid stayed nearly unchanged. The cut in employers’ social insurance contributions has had an effect on the level of compensation of employees from the beginning of 2017. The investment rate of non-financial corporations, or the proportion of fixed capital investments in value added, grew to a 0.1 percentage point higher level than in the previous quarter to 28.6 per cent.

Profits of financial and insurance corporations grew from one year back

The sector’s value added grew in the third quarter by five per cent from the corresponding quarter of the previous year, while output remained unchanged and intermediate consumption fell by around five per cent. Due to international group changes in the sector, the operating surplus describing profits in the sector grew significantly and was EUR 768 million. Value added and operating surplus describe the income that is generated from providing financial services to the public. They do not include property income or holding gains of securities.

Financial position of general government weakened slightly from a year ago

In July to September 2017, consolidated total general government revenue grew by EUR 200 million from the respective quarter of the previous year. Consolidated expenditure increased by EUR 300 million. The difference between revenue and expenditure, that is, the deficit (net borrowing) of general government declined by EUR 100 million. Of the sub-sectors, the financial position of central government improved somewhat, while the financial position of local government and social security funds weakened slightly. General government is comprised of central government, local government and social security funds. Consolidated total revenue and expenditure are figures in which flows between the general government sub-sectors have been eliminated. More detailed statistics, where the sub-sectors are specified, are published in the quarterly sector accounts of general government: Quarterly non-financial accounts for general government.

Current account clearly in surplus in the third quarter of 2017

Exports of goods at current prices from Finland to abroad amounted to EUR 14.4 billion in the third quarter of 2017. Exports of goods increased by EUR 1.3 billion or 10.3 per cent from the respective quarter of the year before. Exports of services amounted to EUR 6.3 billion, which was EUR 0.5 billion more than one year ago. Imports of goods to Finland at current prices were EUR 13.7 billion. Compared to one year ago, the value of imports of goods increased by EUR 0.9 billion (6.7 per cent). Imports of services amounted to EUR 6.5 billion, which was on level with one year ago. The balance of goods and services showed a surplus of EUR 0.4 billion in the third quarter of 2017.

Property income received from abroad was around EUR 1.2 billion higher than property income paid abroad. Property income includes dividends, interests and reinvested earnings. Current transfers paid abroad from Finland were around EUR 0.4 billion higher than current transfers paid from abroad to Finland. The most significant current transfer item is the GNI payment paid by the state to the EU.

The current account showed a surplus of EUR 1.4 billion in the third quarter of 2017, while one year ago, the surplus was EUR 0.2 billion.

Data and methods used

The quarterly data become revised as source data are updated. The biggest revisions take place for the last two to three years, because the data in the annual accounts are still preliminary. Examined by quarter, the biggest revisions occur in the release for the second quarter at the turn of September and October and in the release for the fourth quarter at the turn of March and April. These revisions are caused by updated annual national accounts data. The data in the publication are based on the data sources available by 14 December 2017. The data for 1999 to 2016 mainly correspond with the annual sector accounts of the national accounts, although the updating of source data may cause differences to the previous annual accounts release.

The saving rate, profit share and investment rate in the quarterly publication of sector accounts are net amounts, i.e. consumption of fixed capital has been removed from the figures. The key indicators in these statistics were calculated as follows:

Households' saving rate = B8N / (B6N+D8R)

Households' investment rate = P51K / (B6N+D8R)

Profit share of non-financial corporations = B2N / B1NPH

Investment rate of non-financial corporations = P51K / B1NPH

The volume indicator, measuring the development of households' adjusted disposable income, adjusted for price changes and its change percentages can be found in Appendix table 3 of this publication. This volume indicator is calculated using the price data of the statistics on quarterly national accounts, with which the components of adjusted disposable income are deflated. Households' disposable income is deflated with the implicit price index of household consumption expenditure. Price data are also available for the consumption of non-profit institutions serving households. As a methodological shortcoming, general government individual consumption expenditure has to be deflated with the total general government consumption expenditure for lack of more accurate data. The volume time series was formed with the annual overlap method.

Source: Sector accounts, Statistics Finland

Inquiries: Pekka Tamminen 029 551 2460, Juha Martikainen 029 551 3225, kansantalous.suhdanteet@stat.fi

Director in charge: Ville Vertanen

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Updated 20.12.2017