Business profits lift saving

National saving (from all sectors) rose to $2.9 billion for the year ended March 2008 from a fourteen year low of $1.6 billion in 2007, Statistics New Zealand said today. This is the first increase in national saving for four years. Contributing to this rise, gross operating surplus increased 8.5 percent, reflecting increased business profits (mainly for agriculture and manufacturing). Compensation of employees increased 6.0 percent for the year ended March 2008.

Gross domestic product (GDP) in current prices increased 7.0 percent for the year ended March 2008, following a 5.1 percent increase in the previous March year. Current prices means that the effects of inflation have not been removed, unlike the headline estimates presented in the quarterly GDP release.

National disposable income, which measures the total income available to New Zealanders (from all sources, both domestic and overseas) for consumption or saving, rose 6.7 percent. This follows a 4.7 percent rise in the March 2007 year. National disposable income grew at a faster rate in the March 2008 year than final consumption expenditure, resulting in higher national saving.

Total final consumption expenditure by households and government increased 5.7 percent, the lowest increase since the year ended March 2002. Household consumption expenditure increased 5.0 percent in the year ended March 2008, following an increase of 5.6 percent in the previous year, dropping below increases above 6.0 percent for the years ending March 2003–2006.

The experimental household income and outlay account shows that household consumer debt interest on housing increased 20.8 percent, up $2.1 billion in the March 2008 year, following annual increases in excess of 20 percent for the past four years.

External financing of capital investment increased, with net borrowing from the rest of the world growing from $14.2 billion in the March 2007 year to $15.0 billion in 2008. However, the ratio to GDP improved from 8.6 percent of GDP to 8.4 percent of GDP in March 2008. Capital investment in fixed assets increased 6.0 percent, driven by residential building (up 9.0 percent) in the year ended March 2008. Other construction (which includes roads, bridges and dams) increased 10.0 percent, and plant, machinery and equipment increased 5.0 percent in the March 2008 year.