National balance sheet accounts

Second quarter 2006

Highlights

Note to readers

Growth in national net worth slows

National net worth reached $4.7 trillion by the end of the second quarter, or $142,900 per person. The gain in net worth resulted from an increase in national wealth (economy-wide non-financial assets) which was partially offset by increased net foreign debt. The growth in national net worth slowed to 1.2% in the second quarter, less than the average of 1.6% for the previous four quarters.

Growth in national net worth slows

Growth in national wealth was up +1.7% in the second quarter from 1.0% in the first quarter. The increase in the market value of residential real estate continued to be the major contributor to the growth in national wealth. It accounted for about two thirds of the increase in national wealth in the quarter. Increases in other non-financial assets including increased value of non-residential construction added to national wealth in the quarter.

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Growth in household net worth stalls

Gains in household net worth stalled in the quarter, recording the lowest growth rate in seven quarters. Most notably, the stock market correction was reflected in a reduction in the value of corporate shares and mutual funds, as well as limited gains in the value of pension assets. This was only partly offset by continued advances in the value of residential real estate, with gains largely attributable to price increases.

With the continued rise in household debt, and the modest increase in net worth, households had $0.18 of debt for every dollar of net worth at the end of the second quarter, up slightly from the first quarter. Debt service charges represent about 8% of personal disposable income.

Household leverage edges up

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Corporate leverage eases

Growth in credit market debt of non-financial corporations slowed in the second quarter, and the ratio of debt to equity resumed its downward trend. Corporations continued to generate surplus funds on a net basis and remain a lender to the rest of the economy, a trend which began in 2000.

Corporate leverage eases

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Government debt continues to fall

Government net debt (total liabilities less total financial assets) declined significantly in the second quarter, led by a large government sector surplus. Net government debt (at book value) as a percentage of Gross Domestic Product has continued its steady decline to about 45%, a level not seen in more than 20 years.

Net foreign debt advances on the heels of a large decline

Growth in Canadian assets abroad was exceeded by the growth in Canadian liabilities to non-residents. This largely reflected the negative impact of the strengthening Canadian dollar on Canada's foreign assets, which exceeded the moderating impact on foreign liabilities. In addition, non-resident investment in Canada outpaced Canadian investment abroad in the quarter. As a result, Canada's net foreign debt (the amounts owing to non-residents less foreign assets held by Canadians) was up significantly in the second quarter, following a large decline at the time of the first quarter. This dampened the growth in national net worth in the second quarter.