Canadian households were wealthier in the second quarter of this year after losing ground in the three previous quarters, with stock market gains leading the recovery, Statistics Canada said Monday.
Household net worth advanced by $141-billion to $5.6-trillion.
“Canadian stock markets recovered partially in the second quarter, with the S&P/Toronto Stock Exchange composite index up nearly 20 per cent,” Statscan said.
“The resulting increase in the value of household financial assets (including shares, mutual funds and pension assets) was the principal factor behind the rise in household net worth,” Statscan wrote in a report on national balance sheet accounts.
The use of credit also rose more quickly in the quarter, with notable borrowing for mortgages as resale housing markets picked up, and an upswing in consumer credit as car sales increased.
“Despite the growth in credit market debt, households' debt relative to net worth edged down during the second quarter, as gains in assets more than offset the increase in liabilities,” Statscan said.
Households had 24.8 cents of debt for every dollar of net worth, compared with 24.9 cents in the first quarter.
On balance, “this was a positive report as it suggests that, with the worst of the economic and financial crises now behind us, Canadian householders are beginning the slow process of repairing the damage done to their balance sheets,” Toronto-Dominion Bank economist Millan Mulraine said in a research note.
“Moreover, with the recession appearing to have come to an end, we are likely to see further improvement in households' net worth in the coming quarters as the economy grows,” Mr. Mulraine said.
He noted that, despite the improvement in the second quarter, household net worth remains 6.1 per cent below its peak of $6-trillion, reached in the second quarter of 2008.
Although household net worth increased, Statistics Canada reported that net worth of corporations fell by $208-billion in the second quarter.
In the public sector, government levels of debt rose in the second quarter to 39.8 per cent of the economy from 38.3 per cent in the previous three months and from 36 per cent last year.
With a file from The Canadian Press
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