Home > Statistics > Quarterly sector accounts > 2015 > 3rd quarter > 1. Sector-specific review on the data for the third quarter of 2015

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

1.1 Households’ disposable income and consumption expenditure almost equal

The disposable income of households grew in the third quarter of 2015 by 2.6 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 over EUR 0.4 billion in social benefits received. Property income diminished slightly mainly as dividend income contracted, and entrepreneurial income grew by around EUR 0.1 billion. On the expense side, income taxes paid decreased by around EUR 0.2 billion and social contributions paid increased by good EUR 0.2 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 third quarter of 2015, adjusted disposable income grew at current prices by 2.2 per cent and adjusted for price changes by 1.8 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 -0.2 per cent in the third quarter of 2015. In the previous quarter, it stood at 0.3 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 10.2 per cent of disposable income in the third quarter of 2015, which was practically the same as the corresponding data of the previous quarter that stood at 10.3 per cent. Most of households' investments were investments in dwellings.

Compensation of employees paid by non-profit institutions serving households decreased by 1.2 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 third quarter of 2015, the seasonally adjusted profit share of non-financial corporations weakened by good 0.9 percentage points from the previous quarter and was 22.3 per cent. The profit share refers to the share of profits in value added. The profit share weakened because the non-financial corporations sector's expenditure on wages and salaries grew and value added fell.

The investment rate of non-financial corporations, or the proportion of fixed capital investments in value added, has been declining in the long term but the drop seems to have levelled out in 2015. In the third quarter of 2015, the investment rate was only 0.1 percentage points lower than in in the previous quarter and was 24.8 per cent.

1.3 Profits of financial and insurance corporations grew from the corresponding quarter in 2014

The value added in the sector rose by 1.8 per cent from the corresponding quarter in 2014, while output grew by 0.4 per cent and intermediate consumption decreased by 0.8 per cent. Compared to one year ago, the operating surplus describing profits in the sector grew from EUR 540 million one year ago to close on EUR 590 million. The slightly smaller growth in compensation of employees compared to value added and abolition of the bank tax at the beginning of 2015 boosted profits. Net lending that describes the financial position of the sector was in line with last year. 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.

1.4 Financial position of general government weakened a bit from one year back

In the third quarter of 2015, consolidated total general government revenue declined by EUR 43 million from the respective quarter of the previous year. Correspondingly, consolidated expenditure increased by EUR 112 million. The difference between revenue and expenditure, that is, the deficit (net borrowing) of general government rose by EUR 155 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.

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 Current account clearly in surplus in the third quarter of 2015

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 18.7 billion in the third quarter of 2015. Exports decreased by EUR 0.9 billion or 4.5 per cent from the respective quarter of the year before. Imports to Finland at current prices were EUR 18.2 billion. Compared to one year ago, the value of imports decreased by EUR 1.4 billion (7.1 per cent). The drop in the value of imports was still affected by the drop in the prices of oil products.

Due to decreased imports, the balance of goods and services improved from one year ago. The current account also improved by the fact that the property income received from the rest of the world was higher than that from Finland to abroad. The balance of goods and services showed a surplus of EUR 0.5 billion and the current account was EUR 1.1 billion in surplus in the third 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. The revised data for 2014 of the annual balance of payments inquiry and international trade in services cannot be utilised in the sector accounts until towards the end of 2016.

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 9 December 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: Pekka Tamminen 029 551 2460, Katri Soinne 029 551 2778, kansantalous.suhdanteet@stat.fi

Director in charge: Ville Vertanen

---

Updated 23.12.2015