Household saving only just positive

New Zealanders are spending almost everything they earn, with only about $700 million in household saving in the March 2020 year, slightly less than in 2019, Stats NZ said today.

“That’s the equivalent of each occupied household, numbering 1.79 million in New Zealand, earning about $412 more a year than they spend,” national accounts senior manager Paul Pascoe said.

“After the global financial crisis in 2008/2009 the household saving rate picked up sharply for a few years, but more recently household saving has been relatively low. Income is increasing but spending has been rising even faster for the past seven years.”

Year ended MarchHousehold saving ($)
2006-5093000000
2007-3512000000
2008112000000
2009-1501000000
20102154000000
20113460000000
20124059000000
20131764000000
20141638000000
2015-407000000
2016-28000000
2017478000000
2018-90000000
2019870000000
2020736000000
Year ended MarchSaving ratio (%)
2006-5.8
2007-3.7
20080.1
2009-1.4
20101.9
20112.9
20123.2
20131.4
20141.2
2015-0.3
20160
20170.3
2018-0.1
20190.5
20200.4

Household net disposable income is the amount of money a household has once all money coming in such as wages, interest, and child support, and outgoings, like taxes, have been accounted for. It represents the money a household can spend, save, or invest.

Net disposable income for households increased $8.1 billion, or 4.6 percent, to $183.2 billion in the 2020 year. This was similar to final consumption expenditure, up $8.2 billion, or 4.7 percent, to $182.5 billion. This meant that household saving fell to $0.7 billion for 2020, down from $0.9 billion in 2019.

On the income side, employees’ pay, perks, and other compensation increased 5.9 percent to $137.7 billion in the year ended March 2020, reflecting both pay rises and more people employed. Provisional estimates of the income of self-employed business owners and partnerships increased 5.9 percent to $34.3 billion, with $6.4 billion of this entrepreneurial income from agriculture businesses and $28.0 billion from other industries such as property operators, construction, and professional services.

Household spending on housing, power, and gas (household utilities), recreation and culture, and food and non-alcoholic beverages led increases in 2020. Income tax payable by households increased 7.2 percent to $41.5 billion.

The latest figures are for the 12 months before New Zealand went into lockdown in late March as a result of the COVID-19 pandemic.

Household adjusted net disposable income

Household adjusted net disposable income was up 5.4 percent to $224.6 billion for the year ended March 2020.

“Household net disposable income represents the total income of New Zealanders, while adjusted net disposable income includes social transfers in kind – health, education, and housing spending on behalf of households by the government and non-profits,” Mr Pascoe said.

Household net disposable income per capita was $36,560 for the year ended March 2020. Adjusted for social transfers in kind, this income increased to $44,822 per capita.

This means the equivalent spending of $8,262 per person was made directly by the government and non-profits on behalf of households for the year ended March 2020, up from $7,737 per person for March 2019.

Year ended March“Social transfers in kind“Net disposable income“Adjusted net disposable income
2006 per capita” per capita” per capita”
200748392110625944
200851172254427662
200955342445329987
201060842460630690
201162682601532283
201263392713833477
201365612857735138
201465932877435367
201567732976836540
201669552997836932
201770173096237979
201870363267439710
201973083394441252
202077373557443311

“The increase in spending on behalf of households for the March 2020 year represents increased government spending on health, education, and housing services,” Mr Pascoe said.

Household investment and net lending

Households’ investment was $16.3 billion in the year ended March 2020 as the trend of investment in new homes and major home improvements continued.

New Zealand households borrowed $10.2 billion in the March 2020 year, the equivalent of approximately $2,000 for every person in New Zealand.

Net borrowing represents the difference between saving and investment – the shortfall comes from other sectors, including the rest of the world. Net borrowing for the year ended March 2020 represents new borrowing and is not an accumulated total of previous years’ borrowings.

New Zealand households have been in a net borrowing position since 2013.

Year ended MarchNet lending per capita
2006-2614
2007-2212
2008-1339
2009-1198
2010-131
20115076
20121506
2013-448
2014-1032
2015-1620
2016-1907
2017-1856
2018-2124
2019-1966
2020-2033

The figures for the year ended March 2020 are provisional and may be subject to revision.

/Stats NZ Public Release. The material in this public release comes from the originating organization and may be of a point-in-time nature, edited for clarity, style and length. View in full here.