Increased wage costs results in decrease in business profit share

Eurostat and European Central Bank reveal business profit share down to 38.5% in euro area and 37.8% in EU27 according to seasonally adjusted quarterly European sector accounts.

30 January 2012, 12:00am

1 min read

In the third quarter of 2011, compared with the second quarter of 2011, the business investment rate rose in both the euro area and the EU27.

In the euro area, the business profit share decreased as wage costs grew at a higher pace than value added.

In the third quarter of 2011, the gross investment rate of non-financial corporations was 20.5% in the EU27, compared with 20.3% in the second quarter of 2011.

In the euro area, the investment rate was 21.1% in the third quarter of 2011, compared with 20.8% in the previous quarter, as investment grew at a higher pace ( 2.1%) than gross value added ( 0.5%). Stocks of materials, supplies and finished goods continued to increase (see table 2).

In the EU27, the gross profit share of non-financial corporations was 37.8% in the third quarter of 2011 compared with 38.1% in the previous quarter.

In the euro area, the profit share was 38.5% in the third quarter of 2011 compared with 38.8% in the previous quarter. This decrease was due to value added growing at a lower pace ( 0.5%) than compensation of employees (wages and social contributions) plus taxes less subsidies on production ( 1.0 %).