New Zealand saves more

By Phil Boeyen, ShareChat Business News Editor

Tuesday 6th November 2001

New Zealand has improved its saving record but households continue to spend more than they earn according to new figures.

Statistics New Zealand has released the annual national accounts for the year ended March 2001 which provide information on sources of income, spending patterns and national saving.

According to the new figures the two key components of national income both recorded strong growth, with compensation of employees rising 5.2% and business profits up 8.5% for the year.

Although net investment flows out of New Zealand were up $1.1 billion or 17.1% on the previous year, national disposable income - which measures the income available to New Zealand residents for current consumption or saving - still rose 5.3%.

"Final consumption expenditure (private and government) was up 3.5%, resulting in national saving recording an increase, up from $0.7 billion to $2.3 billion," Statistics New Zealand says.

"As a percentage of national disposable income, saving was 2.6%, up from the 0.8% in 2000 but below the last decade's peak of 4.7% in 1996."

However while the country, including central government and the business sector, is doing better overall, households continue to spend more than they earn. Still, there has been some improvement.

"Although household consumption expenditure increased by 4.3%, the disposable income of households rose more, up 5.9%, resulting in the level of household saving rising from a deficit of $3.147 billion to a deficit of $2.363 billion. The saving ratio rose from negative 5.1% to negative 3.6%.

"This reflected relatively buoyant household incomes as a result of increased employment levels and higher earnings for both paid employees and the self-employed," Statistics NZ says.

The figures show that increased spending occurred across most commodities with the largest rise in services, up 5.6%. Vehicle operating costs were up 10.4%, largely due to increased petrol prices. Other increases in spending were in restaurants and hotels, recreation and education services.

Farmers in particular are in a much better position than the previous year according to the data with the self-employed income of farmers estimated to have increased $1.6 billion or 59.1% compared with last year.

"Earnings from sheep, cattle and dairy products were major contributors to the improvement in farm profits, with higher overseas prices, increased volumes of production and favourable exchange rates all contributing."

Comments from our readers

No comments yet