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5202.0 - Spotlight on National Accounts, 2007  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 15/05/2007   
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The Household saving ratio is one of the headline aggregates in the quarterly Australian National Accounts: National Income, Expenditure and Product (cat. no 5206.0) and annual Australian System of National Accounts (cat. no. 5204.0). For some time the Household saving ratio has been declining, and in fact became negative for the first time in 2002-03, and has remained negative since then. These trends have prompted a great deal of interest among researchers and policy makers. This Spotlight provides an overview of the conceptual framework and related data and an example of the type of analysis that can help users interpret the Household saving ratio.

Figure 1 Household saving ratio

Graph: Figure 1 Household saving ratio
View underlying data tables as a Lotus 123 File: 5204.0 Table 1. Key National Accounts Aggregates
Lotus 123)


Household saving cannot be directly measured. Rather it is calculated as a residual item by deducting Household final consumption expenditure from Household disposable income as presented in the Household income account. The scope of the Household sector in the National Accounts, and hence the scope of the Household saving ratio includes households, unincorporated enterprises and nonprofit institutions serving households. Due to data limitations it is not possible to completely separate the different sectors.

Saving can be calculated on a gross or a net basis depending on the definition of Household disposable income that is used. Gross disposable income is calculated before the deduction of Depreciation (Consumption of fixed capital in National Accounting terms) while Net disposable income is calculated by deducting Depreciation from Gross disposable income. Net household saving is therefore defined as Net household disposable income less Household final consumption expenditure and Gross household saving is defined as Gross household disposable income less Household final consumption expenditure. The published Household saving ratio is calculated on a net basis as the ratio between Net Saving and Net household disposable income. The related Gross household saving ratio can also be derived. Figure 2 presents data relevant to these aggregates.

Figure 2 Calculation of Household saving ratio


Gross disposable income
481 152
495 162
529 182
562 872
598 990
Final consumption expenditure
433 649
461 031
492 315
520 982
547 138
Gross saving
47 503
34 131
36 867
41 890
51 852
Consumption of fixed capital
42 819
46 155
50 107
51 609
55 664
Net disposable income
438 333
449 007
479 075
511 263
543 326
Net saving
4 684
-12 024
-13 240
-9 719
-3 812
Gross Household Saving Ratio
Net Household Saving Ratio

View underlying data tables as a Lotus 123 File: Table 46 Household Income Account (cat. no. 5204.0). (Help: Lotus 123)

It is possible, conceptually at least, to estimate saving in an alternative manner by measuring the transactions in Households' financial assets and liabilities (their change in financial position) and then adjusting for capital purchases, sales and some other items in the Household capital account (Table 49) published annually in Australian System of National Accounts (cat. no. 5204.0). Detailed information on financial assets and liabilities are published quarterly in the Australian National Accounts: Financial Accounts (cat. no. 5232.0).

Both approaches to measuring saving rely on residual derivation and are subject to net errors and omissions in the components. On balance it is considered that the income account approach to saving is more stable and accurate, especially on a quarterly basis. The income account approach is also available on a consistent basis from 1959-1960 whereas the alternative measure is available from 1989-90 only.

The Household saving ratio does not take into account capital gains and losses as these are not considered to be part of Household disposable income. Thus a period of high asset price inflation (e.g rising house prices) will not directly influence the Household saving ratio. When considering the "wealth effect" it is possible that consumption in current quarters will rise on the basis of strong gains in the value of assets and in this situation saving will fall, all else being equal.

It is important therefore to consider the Household saving ratio in context of other economic variables such as the changing pattern and composition of household wealth. A Household balance sheet (Table 51) and associated analytical measures of Household income, consumption, saving and wealth (Table 48) that take capital gains and losses into account are published annually in Australian System of National Accounts (cat. no. 5204.0).


The fact that saving is a residual measure has a number of implications for its measurement. Most importantly it is subject to measurement errors contained in the various series in the Household income account. As the difference between the Household disposable income and Household final consumption expenditure is relatively small, caution should be exercised in interpreting the Household saving ratio in recent years, because major components of household income and expenditure may be subject to significant revisions. Many of these series are based on annual indicators and in a number of instances the household sector is measured as a residual of all other sectors.

Consequently, there is a strong likelihood of revisions to the measure of saving for the latest periods. The impact of these revisions on the Household saving ratio can cause changes in the level and direction (and therefore the interpretation) of the Household saving ratio.


The Household saving ratio can be analysed in conjunction with a range of data. The recent negative Household saving ratio has been against a backdrop of relatively low interest rates and unemployment (Figure 3), combined with increasing Household net worth. Other factors such as consumer confidence, broader economic conditions and access to credit can also influence the Household saving ratio. This section provides an example of the type of analysis that users may wish to undertake to better understand the behaviour of the Household saving ratio.

Levels of unemployment relate to both household's income and expenditure. Income for households increases as people move out of unemployment. Falling unemployment may also increase confidence (via increased job security) among households which may react by increasing expenditure. Movements in interest rates will have similar affects on confidence, but will also directly affect consumption via movements in interest repayments. High interest rates may also encourage households to move resources away from expenditure to saving. Changes in Household net worth also help to provide an understanding of the changes in the Household saving ratio.

Figure 3 Interest and unemployment rates
Graph: Figure 3 Interest and unemployment rates
Source: RBA Bank Accepted 90 days & Labour Force, Australia, (cat. no. 6202.0)

One way of analyse the behaviour of the Household saving ratio is to separate the estimates into three distinct periods. Figure 4 shows that 1992-1997 saw an average saving rate of 5.9, 1998-2002 2.0 and after 2003 -2.0. The period 1992-1997 saw a fall in interest rates but unemployment remained above 8%. The 1998-2002 period saw a combination of falls in both rates and the Household saving ratio. The last period has seen a steady decline in the unemployment rate and a slight increase in interest rates.

Figure 4 Average Household saving ratio and related variables


Household saving ratio
Interest rate
Unemployment rate
Total assets1
Non-financial assets1
Financial assets1
Net worth1

View underlying data1 tables as a Lotus 123 File: Table 51. Household Balance Sheet, Current prices as at 30th June (cat no 5204.0). (Help: Lotus 123)

The average growth in Total assets (11.3) has been the strongest in this last period driven by growth in Non-financial assets (mostly housing). Growth in total liabilities (14.2%) has also been strong, however, Net worth has still increased at 10.7%. As the average growth in Net worth has increased over the three periods the average Household saving ratio has fallen.

The increased liabilities on the Household balance sheet have been driven by increased debt on dwellings to and a lesser extent consumer debt. The feature article Household Sector Balance Sheet – A National Accounts' Perspective explores in more detail the Household Balance Sheet and associated measures of household debt.


This Spotlight has provided an overview of the conceptual framework and construction of the Household saving ratio. It has also highlighted a number of related statistics and has provided an example of the type of analysis which can be undertake to provide further insight into the behaviour of the Household saving ratio.


For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Terry Rawnsley on Canberra (02) 6252 6711.

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