National balance sheet and financial flow accounts, second quarter 2013
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National net worth increased to $7.3 trillion in the second quarter, up 3% from the first quarter to reach $207,300 on a per capita basis. This compares with a 2% rise in the first quarter. National saving accounted for 2% of the increase.
Economy-wide non-financial assets, or national wealth, advanced 1% or by $95 billion to $7.4 trillion at the end of the second quarter, mainly on gains in the value of residential real estate. This gain in national wealth was a major contributor to the higher national net worth, together with lower net foreign indebtedness.
The decrease in Canada's net foreign indebtedness (international liabilities less international assets) largely reflected the impact of lower domestic stock markets on the value of Canada's international liabilities. Also, the revaluation effect of a weaker Canadian dollar, which depreciated by 3.4% against its US counterpart during the quarter, made US dollar denominated assets more valuable.
Funds raised by domestic non-financial sectors on financial markets totalled $70 billion in the second quarter. Households and non-financial corporations accounted for the majority of private sector demand for funds. The government sector demand for funds increased in the second quarter, mainly driven by federal and provincial paper issuance.
Credit market debt (consumer credit, mortgages, loans, short-term paper and bonds) of domestic non-financial sectors totalled $4.2 trillion at the end of the second quarter, up 1.7% from the previous quarter. Bonds accounted for $1.5 trillion of the outstanding credit market debt, with government debt at about $1.1 trillion.
Household net worth advanced 0.7% in the second quarter, led by a 1.6% gain in the value of household real estate during the quarter. On a per capita basis, household net worth rose to $205,900 in the second quarter.
The increase in household net worth was tempered by weakness in domestic stock markets. The Standard and Poor's / Toronto Stock Exchange composite index was down 4.9% in the quarter, compared with a 2.5% increase in the previous quarter.
Funds raised by households (consumer credit, loans and mortgages) were $25.9 billion in the second quarter. Mortgage borrowing led the demand for funds at $18 billion in the quarter with consumer credit also contributing to the household demand for funds.
Mortgage debt stood at just over $1.1 trillion and consumer credit debt reached $500 billion by quarter end. The growth in credit market debt increased from 0.5% to 1.6% during the quarter. Leverage, as measured by household credit market debt to disposable income, increased to 163.4% in the second quarter, up from 162.1% in the first quarter. This increase followed two consecutive quarterly declines in this measure. Owner's equity as a percentage of real estate remained stable at 69.1%.
Total government net debt (expressed at book value) rose from $922 billion in the first quarter to $937 billion in the second quarter. New government borrowing during the quarter was led by federal short-term paper issuance.
The ratio of total government net debt to gross domestic product continued to trend upward, increasing to 51.0% at quarter end from 50.4% in the first quarter. Higher borrowing drove this increase, which was accentuated by revaluation effects to foreign currency denominated provincial bonds arising from a weaker Canadian dollar.
The corporate sector remained a net lender to the rest of the economy, led by financial corporations. The corporate sector lent $17 billion during the quarter, up from $10.2 billion during the previous quarter.
Financial assets of financial corporations increased by $11 billion to reach $9.9 trillion, with the financial assets of mutual funds representing the largest share of this gain. Of this increase, the majority reflected higher foreign equity assets and mutual fund shares. Bond holdings of financial corporations decreased in value by $27 billion during the quarter as yields were sharply higher.
Non-financial corporations demand for funds was $17 billion during the quarter, comprised mainly of share and bond issuances. On a book value basis, the ratio of debt-to-equity of non-financial corporations edged down in the second quarter, standing at 53 cents of credit market debt for every dollar of equity.
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 sub-sectors 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 National economic 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 second quarter 2013 issue of Canadian Economic Accounts Quarterly Review, Vol. 12, no. 2 (Catalogue number13-010-X). This publication is now 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 has 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 third quarter will be released on December 13.
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