[ad_1]
Kathryn George/Stuff
Household savings has dropped as spending increases.
Strong household spending in the March quarter meant household savings were depleted by $874 million, Stats NZ data shows.
New Zealand household savings fell to $653m in the March 2023 quarter, from the December 2022 quarter’s $1.5 billion.
Households’ net worth also fell $42.7b (1.9%) in the March 2023 quarter, following falls in the previous four quarters. Net worth is the value of all assets owned by households less the value of all their liabilities.
Annually, households’ combined net worth fell $175b, or 7.3%, in the year ended March 2023, following a period of accelerated growth up to the December 2021 quarter.
Household spending increased by 3.9% in the three months to the end of March, driven primarily by increases in spending on services such as international travel.
Stats NZ spokesperson Paul Pascoe said households saved less, as their spending increased at a faster rate than their disposable income.
Households’ net disposable income rose 2.3% to $58.2b, driven by wages and salaries (up 3.7%), and interest received (up 18.4%).
But offsetting these were an increase in interest payable (15.1%) and a decrease in dividends receivable (down 19.4%).
Household net disposable income is the amount of money a household has once all income such as wages, interest, and child support, and income payable such as taxes have been accounted for. It represents the money available for a household to save, spend, or invest in housing.
The household saving ratio, which compares household saving to net disposable income, fell to 1.1% from 2.7% in the December 2022 quarter.
STUFF
GDP is the last piece of New Zealand’s economic puzzle every quarter.
Pascoe said the main contributor to the drop in household net worth in the quarter was a fall in owner-occupied property values, which were down 2.6%.
“Declining property values have also led the falls in net worth in three of the previous four quarters.”
A rise in household loans of $2.1b also contributed to the decline in net worth.
Financial assets also fell, by $8.3b, mainly due to a decline in equity and investment fund shares. These falls in asset values were offset by a rise in insurance and pensions, up $5.1b, and an increase in currency and deposits of $1b.
Infometrics chief forecaster Gareth Kiernan said it was “hard to be too emphatic about anything in the figures”, partly because the household spending numbers in the GDP data a few weeks ago almost seemed implausibly strong.
“Because of the effects of Covid-19, lockdowns, and border closures over the last few years, the normal seasonal pattern in the data has been broken somewhat, so the seasonal adjustment process is struggling to smooth things out,” he said.
“The latest result continues a trend that has generally prevailed over the last two years of households doing less saving than they were during 2020 and 2021. Part of this change is because interest rates have risen, so households are paying more to service their debt.
“Part of the shift also reflects less ability to spend during the pandemic because of restrictions on people’s movements – either lockdowns or border closures.”
But the latest quarterly result still compares favourably to savings rates between 2016 and 2018.
Putting aside the return towards more normal spending behaviour after the pandemic, there was likely to be an element of caution among households with their spending over the next few quarters, given expectations of weak economic growth and a rising unemployment rate, he said.
[ad_2]