FRANKFURT (Reuters) – Households in the eurozone saw their savings fall slightly in the third quarter of last year, but are still putting away an extremely large share of their disposable income, highlighting a key challenge slowing growth, Eurostat data showed on Monday.
The eurozone savings rate fell to 15.3% in the third quarter from 15.6% three months earlier, the first drop since the start of 2022, but remained well above the 12-13% range before the pandemic.
Eurozone households have been saving an unusually high proportion of their income over the past few years, trying to restore some of their real wealth lost to inflation.
That has kept spending weak and the overall economy barely growing, dashing hopes that household generosity will spur a recovery, more than offsetting the drag of years of industrial recession.
This is in sharp contrast to the United States where the personal savings rate was 4.4% in November, below the historical average and falling as families remain satisfied with their employment prospects.
Although the European Central Bank is still betting on a recovery in consumption, it acknowledged last week that household savings could remain unusually high in the short term, partly due to political and economic uncertainty.
Households used the decline in savings for personal consumption rather than investment, Eurostat added, which is likely to be reflected in modest increases in retail sales during the summer quarter.
spending rose 1.1% in the quarter, but fixed capital investment, which mostly consists of buying or renovating homes, fell to 9.1% of disposable income from 9.2%, a level well below historical levels trends.
Eurostat also said corporate profitability increased in the quarter after a steady decline since the start of 2023.
