Against all odds, the household savings rate picked up at the beginning of the year and is on track to end the year on the up, according to a report by CaixaBank Research to be published this week. The improvement goes against the current, since it occurs despite the rise in interest rates, and coincides with low bank delinquency. The cause lies, according to the author of the report, in the dynamism of the labor market.
Calculations by CaixaBank Research show that the household savings rate registered a change in trend in the first quarter of this year, reaching 7.5% of gross disposable income. This percentage is above the average for the past decade, 6.7%, and is the highest since 2004 if the years of the pandemic are excluded, which were exceptional and registered levels of up to 18.9%.
"The forecast is that in the rest of the year the rate will remain at similar levels and even register a slight rise," says the author of the report, Javier García-Arenas. "The dynamism of gross disposable income is surprising."
The cause of this improvement in the financial health of households, he indicates, is "in the increase in the number of workers." Even with households that save less and suffer a loss of purchasing power, the overall wage bill is increasing because many more are entering the labor market, while consumption is moderating partly due to the containment of inflation.
Despite the fact that August closed with 24,826 more unemployed, the latest EPA available, with data up to June, shows a record number of Social Security affiliates and an unemployment rate of 11.6%, the lowest since the Great Recession.
This is the main cause of the increase in savings, but there are others, including the revaluation of pensions by 8.5% and the "relatively moderate" salary increases, in addition to an increase in migratory flows that has incorporated 241,000 households.
The result of all these factors is a gross disposable income for households of 202,347 million euros, still below the levels prior to the pandemic, but 10% above those of a year earlier. The remuneration of employees, including incorporations into the labor market, increased by 7.8%, while the self-employed entered 10.6% more.
This improvement in income has more than offset the increase in interest on mortgages and loans, which was equivalent to 4,118 million euros in the first quarter. In addition, "household consumption spending has been losing steam," says the report.
The forecast is that this year will end with a 5% increase in household income and with consumption very similar to that of the previous year, which would positively result in savings. Of course, the joy goes by neighborhoods, since "the differences between households are notable", warns CaixaBank Research.
And where does the money of those who save go? "Many households allocate a part to pay off the mortgage," says the author of the report. The Bank of Spain calculates that the mortgage debt is being reduced at a rate of 1,112 million euros per month. Between January and July, the money of the clients in the banks has been reduced from one trillion to 988,457 million, but due to the lower volume in current accounts. Deposits have increased instead from 65,162 million to 93,504 million.