Canada's national net worth grew 2% to C$6.7T in Q1, the largest quarterly growth rate since Q3 2008; on a per capita basis, national net worth expanded to C$193,500 from C$190,200
June 15, 2012
– National net worth increased 2.0% to $6.7 trillion in the first quarter, the largest quarterly growth rate since the third quarter of 2008. On a per capita basis, national net worth expanded to $193,500 in the first quarter from $190,200 in the previous quarter.
The advance in national net worth was driven by higher asset values, as national wealth increased 1.5% to $6.9 trillion, while net foreign debt was $0.2 trillion, a 13.0% decrease from the fourth quarter of 2011.
Household net worth rises on continued equity market strength
Household net worth was up 1.8% in the first quarter, led by gains in the values of household holdings of equities (including mutual funds) and pension assets. The increase in equities reflected a 3.7% rise in the Standard and Poor's / Toronto Stock Exchange composite index in the quarter, marking the second consecutive quarterly increase in equity values. The value of total real estate assets also increased during the quarter, by just over 1%. On a per capita basis, household net worth rose to $185,800, from $182,900 in the previous quarter.
Growth in household credit market debt slowed in the first quarter to 0.9%, driven by a slower rate of borrowing in consumer credit and mortgage loans. Moreover, the gains in the value of household financial assets more than offset the increase in credit market debt, resulting in a decrease in the ratio of credit market debt to net worth to 24.9% in the first quarter from 25.1% in the previous quarter.
Growth in household disposable income slowed in the quarter as a result of a decline in household investment income and an increase in personal income taxes and other social contributions. This slowdown was more pronounced than the slowdown in credit market debt and, as a result, the ratio of credit market debt to personal disposable income increased to 152.0% in the first quarter from 150.5% in the previous quarter.
Government net debt trends upward
Total government net debt (expressed at book value) rose to $820 billion in the first quarter from $810 billion in the previous quarter. The ratio of total government net debt to gross domestic product (GDP) continued to trend upward, increasing slightly to 47.2% in the first quarter from 47.0% in the fourth quarter.
The increase in the ratio of debt to GDP for other levels of government (including provincial governments) was more pronounced than that of the federal government from the fourth quarter of 2008 to the end of the first quarter of 2012. Over this time, the debt-to-GDP ratio for other levels of government rose from 16.4% to 23.7%. The federal government debt-to-GDP ratio rose from 29.2% to 34.9% over the same period.
Corporate leverage continues to decline
The ratio of total private non-financial corporation credit market debt to equity (expressed at book value) decreased to 54.0% in the first quarter, continuing a downward trend observed since the fourth quarter of 2008. Although corporate sector credit market debt increased in the first quarter, led by net new issuance of commercial paper, this increase was more than offset by the continued increase in corporate undistributed earnings and net new equity issues.
The value of financial institutions' equity portfolio increases
The value of total financial assets of lending institutions and institutional investors (such as trusteed pension plans and mutual funds) increased 1.8% to $7.6 billion in the first quarter. This increase reflected a second consecutive quarter of positive equity market performance.
The increase in the value of financial assets was led by upward revaluations of holdings of Canadian equities and, in particular, foreign shares. The latter's increase in value was moderated by the appreciation of the Canadian dollar against most major currencies in the first quarter.