Home > Statistics > Quarterly sector accounts > 2015 > 1st quarter > 1. Sector-specific review on the data for the first quarter of 2015

1. Sector-specific review on the data for the first quarter of 2015

1.1 Households' consumption expenditure slightly bigger than income

The disposable income of households grew in the first quarter of 2015 by 2.1 per cent compared to the corresponding quarter in 2014. 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 expense items are taxes paid and social contributions.

Compared to the figures one year ago, disposable income grew mainly due to a growth of good EUR 0.2 billion in wages and salaries and of around EUR 0.4 billion in social benefits received. Property income stayed in practice unchanged and entrepreneurial income grew by around EUR 0.1 billion. On the expense side, both income taxes paid and social contributions paid grew by good EUR 0.1 billion, while no significant changes took place in the other expense items compared to the corresponding quarter of the previous year. Both interest income and interest expenditure still diminished slightly.

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 first quarter of 2015, adjusted disposable income grew at current prices by 2.2 per cent and adjusted for price changes by 1.5 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 -0.3 per cent in the first quarter of 2015. In the previous quarter, it stood at 0.2 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 10.6 per cent of disposable income in the first quarter of 2015, which was practically the same as the corresponding data of the previous quarter that stood at 10.7 per cent. Most of households' investments were investments in dwellings.

Compensation of employees paid by non-profit institutions serving households increased by 0.9 per cent compared with the quarter of one year ago.

In these statistics, the households sector only covers 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, i.e. including consumption of fixed capital. Net data are used in these statistics, that is, when consumption of fixed capital is taken into account, saving and investment rates decrease.

1.2 Profit share of the non-financial corporations sector weakened

In the first quarter of 2015, the seasonally adjusted profit share of non-financial corporations weakened by good two percentage point and was 21.2 per cent. The profit share refers to the share of profits in value added. The profit share weakened because the entire value added of the non-financial corporations sector contracted and expenditure on wages and salaries increased.

The investment rate of non-financial corporations, or the proportion of fixed capital investments in value added, has mostly been contracting for the past three years. In the first quarter of 2015, the investment rate was only slightly higher than in the previous quarter, 23.5 per cent.

1.3 Profits of financial and insurance corporations grew a little

The value added in the sector rose by 4.6 per cent from the corresponding quarter in 2014, while output grew somewhat more than intermediate consumption. Compensation of employees paid by the sector fell by 0.8 per cent. The operating surplus describing profits in the sector grew from EUR 0.4 billion to EUR 0.5 billion. 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.

Net lending that describes the financial position of the sector weakened slightly and was EUR 1.3 billion, while net lending in the corresponding period in the year before was EUR 1.5 billion. The weaker financial position was mainly the result of an increase in dividends paid by the sector or exceptional timing of the payment of dividends compared with 2014.

1.4 The financial position of general government improved from last year

General government's consolidated total revenue grew by EUR 208 million from the respective quarter of the previous year. Total expenditure decreased by EUR 54 million. 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.

General government's financial position (net lending), which is formed as the difference between the total revenue and expenditure, improved by EUR 262 million from one year ago. On the income side, the financial position was improved by higher social contributions and tax revenue. On the expense side, paid social contributions increased but current transfers and investments decreased.

Of the sub-sectors, the financial position of central government improved, while the financial position of local government and social security funds weakened. More detailed statistics, where the sub-sectors are specified, are published in the quarterly sector accounts of general government .

1.5 Reduction in imports and property income improved the current account

The essential items for the rest of the world sector are exports and imports of goods and services. Exports at current prices abroad from Finland amounted to EUR 17.9 billion in the first quarter of 2015. Exports decreased by EUR 0.2 billion or 1.2 per cent from the respective quarter of the year before. Imports to Finland at current prices were EUR 18.3 billion. Compared to one year ago, imports decreased by EUR 0.8 billion (4 per cent).

Due to decreased imports, the balance of goods and services improved from one year ago. The current account was also boosted by increased property income paid to Finland from abroad and smaller current transfers from Finland to abroad. The balance of goods and services showed a deficit of EUR 0.4 billion and the current account was EUR 0.5 billion in deficit in the first quarter of 2015.

The figures of these statistics can differ from the corresponding figures of the balance of payments statistics due to different revision practices.

1.6 Data and methods used

The quarterly data become revised as source data are updated. The biggest revisions will take place for the latest two to three years, because then 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 18 June 2015. The data for 1999 to 2014 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 release. This volume index is calculated using the price data of the statistics on quarterly 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: Jesse Vuorinen 029 551 3363, Katri Soinne 029 551 2778, kansantalous.suhdanteet@stat.fi

Director in charge: Mari Ylä-Jarkko

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Updated 24.6.2015