Saving by New Zealanders in the March 2021 quarter fell to its lowest level in two years after rising sharply in 2020, Stats NZ said today.
Increases in household spending outpaced income growth, leading to a decline in household saving from the elevated levels that prevailed throughout 2020.
“Household spending increased in the March 2021 quarter, after having been kept in check for much of 2020 by COVID-19 restrictions,” national accounts senior manager Paul Pascoe said.
“Government support measures including the wage subsidy meant that households were able to maintain relatively stable levels of disposable income through 2020. This was despite the COVID-19 restrictions, which constrained household spending. As a result, we saw high levels of household saving throughout 2020.”
“With households spending more in the March 2021 quarter, the household saving ratio has fallen back from the quite high levels experienced through 2020.”
The household saving ratio, which compares saving with net disposable income, was 0.4 percent in the March 2021 quarter, down from 3.2 percent in the December 2020 quarter.
Net disposable income represents the money that households have available to spend on goods and services after accounting for things like taxes.
In the March 2021 quarter, net disposable income rose 3.1 percent, but a 6.1 percent increase in household expenditure reduced household saving to $0.2 billion in the quarter.
The increase in net disposable income was driven by a rise in compensation of employees, and income of self-employed business owners.
The increase in household spending was driven by increased spending on accommodation, restaurant and cultural services, and durable goods.
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This story is part of a new suite of experimental economic statistics released by Stats NZ today covering income, expenditure, and wealth across all sectors of the economy.
- National accounts (income, saving, assets, and liabilities (March 2021 quarter) – a new suite of experimental economic statistics.
- New data shows household net worth increases on the back of rising asset values – related news story.