National balance sheet and financial flow accounts, fourth quarter 2013
National net worth increased 2.7% to $7.7 trillion in the fourth quarter, reaching $218,500 on a per capita basis. This followed a 2.5% gain in the third quarter.
Economy-wide non-financial assets, or national wealth, advanced 1.4% or by $107 billion to $7.7 trillion at the end of the fourth quarter, mainly on gains in the value of residential and non-residential real estate. The increase in national wealth was the main contributor to the higher national net worth.
Canada's net foreign debt declined by $98.1 billion, edging Canada into a net asset position of $26.7 billion by the end of the fourth quarter. The decline was attributable to relatively stronger foreign equity markets and a weaker Canadian dollar, which raised the value of Canada's international assets more than it increased the value of its international liabilities.
Borrowing and debt of non-financial sectors
Funds raised by domestic non-financial sectors on financial markets totalled $47.0 billion in the fourth quarter, led by non-financial private corporations' equity and bond issues as well as bank loans. Credit market debt (consumer credit, mortgages, loans, short-term paper and bonds) of domestic non-financial sectors increased 0.9% to $4.3 trillion at the end of the fourth quarter, led by household mortgages and corporate and provincial government bond debt. This followed a 1.5% gain in the third quarter.
Bonds ($1.5 trillion) and mortgages ($1.4 trillion) accounted for most of the total outstanding credit market debt at the end of the fourth quarter.
Household net worth advanced 3.0% in the fourth quarter, led by a 5.9% gain in the value of shares and other equities. Shares and other equities grew on the basis of the continued strength in domestic and foreign equity markets. The increase in household net worth was also supported by a 1.6% gain in the value of household real estate. On a per capita basis, household net worth rose to $217,700 in the fourth quarter.
The ratio of financial assets to non-financial assets continued its general upward trend, which began after the market decline in 2008 when equity prices decreased sharply. At the end of the fourth quarter, the ratio stood at 118.4%, up from 115.9% in the previous quarter.
At the end of the fourth quarter, mortgage debt stood at just over $1.1 trillion, up 1.1% over the previous quarter. Consumer credit debt reached $508 billion at quarter end, up 0.5% over the third quarter.
Leverage, as measured by household credit market debt to disposable income, edged down from 164.2% in the third quarter to 164.0% in the fourth quarter. The household debt service ratio, defined as household mortgage and non-mortgage interest paid divided by disposable income, remained at a record low. Owner's equity as a percentage of real estate was 69.5% at the end of the fourth quarter, marginally higher than the 69.4% recorded at the end of the previous quarter.
Household demand for funds has moderated over the past six years. The average quarterly growth in mortgage debt in this period was 1.8%, while that of consumer credit debt was 1.3%. In contrast, the average quarterly growth in mortgage debt and consumer credit debt were both higher at 2.5% each from 2002 to 2007.
Total government net debt (expressed at book value) rose from $949 billion in the third quarter to $960 billion in the fourth quarter. Net borrowing by total government stood at $13.2 billion at the end of the fourth quarter.
The ratio of total government net debt to gross domestic product was 51.1% at the end of the fourth quarter, the same level as in the third quarter. The ratio for the federal government decreased for a third consecutive quarter, while the ratio for the other levels of government continued its upward trend, which began in 2008.
The corporate sector remained a net lender to the rest of the economy, led by financial corporations. Corporate net lending amounted to $6.3 billion in the fourth quarter, down from $8.0 billion in the previous quarter.
At the end of the fourth quarter, financial assets of financial corporations increased by $188 billion to surpass $10 trillion. Foreign equity assets accounted for the largest share of this gain, followed by Canadian equity, reflecting strong price gains.
Non-financial private corporations demand for funds was $34.3 billion during the fourth quarter. On a book value basis, the debt-to-equity ratio of non-financial corporations was 56 cents of credit market debt for every dollar of equity at the end of the fourth quarter. This ratio has been relatively stable since the end of 2009.
Households and non-profit institutions serving household sector indicators – Market value, not seasonally adjusted
Note to readers
This release is a combined analysis of the National balance sheet accounts and Financial flow accounts. The National balance sheet accounts comprise the balance sheets of all sectors and subsectors of the economy. The main sectors are households, non-profit institutions serving households, financial corporations, non-financial corporations, government and non-residents. They cover all national non-financial assets and financial asset-liability claims outstanding in all sectors.
The Financial flow accounts (FFA) measure net lending or borrowing by examining financial transactions in the economy by sector. The FFA arrive at a measure of net financial investment, which is the difference between transactions in financial assets and liabilities (for example, net purchases of securities less net issuance of securities). The FFA also provide the link between financial and non-financial activity in the economy, which ties estimates of saving and non-financial capital acquisition (for example, investment in new housing) with the underlying financial transactions.
Definitions concerning financial indicators can be found in "Financial indicators from the National Balance Sheet Accounts."
The System of macroeconomic accounts module, accessible from the Browse by key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.
Links to other releases from the national accounts can be found in the fourth quarter 2013 issue of Canadian Economic Accounts Quarterly Review, Vol. 12, no. 4 (Catalogue number13-010-X). This publication is available from the Browse by key resource module of our website under Publications. Revised national balance sheet and financial flow accounts for the first quarter have been released, along with those for the second quarter. These data incorporate new and revised source data and updated data.
Data on National balance sheet accounts and financial flow accounts for the first quarter will be released on June 19.
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