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National balance sheet accounts
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National net worth reached $5.3 trillion by the end of the second quarter of 2007, or $162,200 per capita. National net worth expanded by $86 billion (+1.6%) in the second quarter, growing less than in any of the previous six quarters.
National wealth (economy-wide non-financial assets) grew 2.3% in the second quarter, abetted by strong economic growth during the quarter. Residential real estate continued to be the major contributor to growth in national wealth, accounting for over half of the gain.
National saving led by governments and corporations contributed to the advance of national net worth in the second quarter. Strong stock markets and residential real estate prices also continued to support the increase in national net worth. However, this gain in the second quarter of 2007 was notably restrained by an increase in Canadians' net foreign indebtedness (with marketable securities on a market-value basis). The revaluation caused by a sharp appreciation of the Canadian dollar had a devaluing effect on foreign assets held by Canadians, contributing to Canadians' increased net indebtedness. Foreign acquisition of Canadian corporate assets was also a factor in increased Canadian liabilities to non-residents.
Household net worth gains ease further
Growth in household net worth continued to slow, but still grew 1.9% in the second quarter. Non-financial assets advanced at twice the rate of financial assets, but the growth in liabilities (+2.8%) outpaced that of assets (+2.0%).
The value of financial assets grew at a reduced pace in the second quarter, in part due to the dampening effect of the sharply appreciating Canadian dollar on foreign currency-denominated investments held in mutual funds and pension plans. Nonetheless, pension assets and equities (including mutual fund units), as well as deposits, were the main contributors to growth in the financial asset holdings of the household sector during the quarter.
Residential real estate grew slightly faster than in the first quarter, providing the bulk of the increase in non-financial assets. This reflected its relative size among household assets, along with sustained strength in new housing construction and in re-sale activity in the second quarter.
Note to readersThe national balance sheet accounts are statements of the balance sheets of all of the various sectors of the economy. They consist of the non-financial assets owned in the various sectors of the economy and of financial claims outstanding. National wealth is the sum of non-financial assets (produced assets, land surrounding structures and agricultural land) in all sectors of the economy. National net worth is national wealth less net foreign liabilities (i.e., what is owed to non-residents less what non-residents owe to Canadians). Alternatively, it is the sum of the net worth of persons, corporations and governments. National saving is the sum of saving of persons, corporations and governments. National saving and investment contribute to change in national net worth. The revaluation of assets and liabilities is also responsible for changes in national net worth. The causes of revaluation include changes in non-financial asset prices, equity prices, interest rates, exchange rates and loan allowances. Quarterly series, both book and market value, are available from the first quarter of 1990; market value estimates have been available since June 2004. For more information on the market value estimates, consult the Balance sheet estimates at market value page of our website. |
Household debt, the sum of mortgage and consumer credit, accelerated sharply over the second quarter of 2007, outpacing growth in personal disposable income. The strong rise in household debt reflects robust spending on residential real estate and consumer goods during the quarter. This, combined with slackened growth in asset values, were factors behind the rise in the household debt-to-net worth ratio to 17.7%.
Non-financial corporate leverage falls
In the second quarter, corporations experienced conditions of sustained growth in net saving, steady business investment and appreciating stock prices. To meet their financing needs, private non-financial corporations turned away from credit market debt and towards share issuance, resulting in a decrease in corporate leverage and resuming the long-term downward trend in the debt-to-equity ratio.
Total government debt further reduced
The surplus of all levels of government expanded in the second quarter, and with increases in financial assets coinciding with a reduction in liabilities, the total government net debt (total liabilities less total financial assets) fell for a 13th consecutive quarter. The decrease in total liabilities was led by a significant reduction in the short-term paper obligations of the federal government. The net retirement of Government of Canada and provincial government bonds also contributed to this public debt reduction. Net government debt as a percentage of gross domestic product (GDP) declined further, representing less than half of GDP, compared to almost 90% a decade ago.
Asset growth of financial institutions slows
Financial institutions, which are traditional net lenders to other sectors of the economy, saw growth in their financial assets decelerate during the second quarter. Sectors primarily involved in investment activities (such as trusteed pension plans and mutual funds) felt the impact of the appreciating Canadian dollar through the devaluation of their foreign investment portfolios. This revaluation effect was partially offset by the increased mortgage and consumer credit holdings of sectors primarily involved in lending activities, such as chartered banks.
Available on CANSIM: tables 378-0003 to 378-0010.
Definitions, data sources and methods: survey number 1806.
The second quarter 2007 issue of National Balance Sheet Accounts, Quarterly Estimates, Vol. 5, no. 2 (13-214-XWE, free) is now available from the Publications module of our website.
The second quarter 2007 issue of Canadian Economic Accounts Quarterly Review, Vol. 6, no. 2 (13-010-XWE, free), is now available online. From the Publications module of our website, under Free Internet publications, choose National accounts.
At 8:30 a.m. on release day, the complete national balance sheet accounts can be obtained on computer diskette. The diskettes (13-214-DDB, $321/$1284) can also be purchased at a lower cost seven business days after the official release date (13-214-XDB, $65/$257). To purchase any of these products, contact the client services officer (613-951-3810; iead-info-dcrd@statcan.gc.ca), Income and Expenditure Accounts Division.
For more information, or to enquire about the concepts, methods or data quality of this release, contact the information officer (613-951-3640), Income and Expenditure Accounts Division.
Table(s).
