Eurozone business profit share down in Q2

By Muhammed Ali Gurtas

ANKARA (AA) – The European Union's statistical office announced Thursday the profit share of non-financial corporations in the eurozone fell in the April-June period.

"The business profit share in the euro area was 40.6 percent in the second quarter of 2018, compared with 41 percent in the first quarter," Eurostat said.

The eurozone or euro area represents the EU's 19 member states that use the single currency, the euro.

"This profitability-type indicator shows the share of the value added created during the production process remunerating capital.

"It is the complement of the share of wage costs [plus other taxes less other subsidies on production] in value added," it said.

Eurostat also said the euro area business investment rate — the ratio of the investment of non-financial businesses in fixed assets, like buildings or machinery, to the value added created during the production process — was 23 percent over the same period, and stable compared to the January-March period.

– Household saving and investment rates

"The household saving rate in the euro area was 12.1 percent in the second quarter of 2018, compared with 12 percent in the first quarter of 2018," Eurostat said in another statement on Thursday.

Eurostat defines the gross saving rate of households as gross saving divided by gross disposable income, with the latter including the change in the net equity of households in pension funds reserves.

"Gross saving is the part of the gross disposable income which is not spent as final consumption expenditure.

"Therefore, the saving rate increases when gross disposable income grows at a higher rate than final consumption expenditure," it said.

Eurostat also reported that the eurozone gross investment rate of households — largely based on residence renovation and purchases — was 9 percent this April-June, showing no change from the previous quarter.

The statistical office noted that the both business and household figures come from a first release of seasonally adjusted quarterly European sector accounts from Eurostat and the European Central Bank.