Capital Goods Price Index: December 2009 quarter

Capital goods price index

The capital goods price index (CGPI) fell 0.2 percent in the December 2009 quarter, following a 0.4 percent fall in the September 2009 quarter and a 0.3 percent rise in the June 2009 quarter.

Two out of six asset groups in the CGPI fell in the December 2009 quarter. The most significant downward contribution to the CGPI came from the plant, machinery, and equipment index (down 1.1 percent). The non-residential buildings index, which fell by 1.0 percent, also drove the CGPI down. The major offsetting influences came from rises in the other construction index (up 1.4 percent), transport equipment index (up 0.4 percent), and the residential buildings index (up 0.1 percent).

The following table shows the amount that each asset group contributed to the All Groups CGPI movement from the September 2009 quarter to the December 2009 quarter.

Note: Points contributions may not sum to total due to rounding.

The CGPI rose 0.9 percent in the year to the December 2009 quarter. The annual increase follows rises of 4.1 percent in the year to the December 2008 quarter and 2.3 percent in the year to the December 2007 quarter. The latest annual increase is the smallest since the September 2003 quarter.

Plant, machinery, and equipment 

The plant, machinery, and equipment index fell 1.1 percent in the December 2009 quarter. This fall was the most significant downward contribution to the CGPI.

The plant, machinery, and equipment index measures items such as computer machinery, furniture, and machinery for mining, quarrying, and construction. The major contribution to the fall in the plant, machinery, and equipment index came from the sub-index for computer machinery.

A review of the plant, machinery, and equipment index has been implemented this quarter, which included changes to how computer machinery is measured. Computer-related price indexes from the United States have been introduced as a proxy to measure the price change of computer machinery. The United States indexes are exchange rate adjusted, and the appreciation of the New Zealand dollar against the United States dollar in the latest quarter had an impact on the decrease in computer prices. For more information on the review of the plant, machinery, and equipment index, please see the ‘Technical notes’ section.

In the year to the December 2009 quarter, the plant, machinery, and equipment index rose 1.9 percent. The latest annual rise follows increases of 6.5 percent and 8.4 percent in the years to the September 2009 and June 2009 quarters respectively.

Non-residential buildings

The non-residential buildings index fell 1.0 percent in the December 2009 quarter, following falls of 1.4 percent and 1.1 percent in the September and June 2009 quarters respectively. This index made the second largest downward contribution to the CGPI.

The major contributions to the latest fall in the non-residential buildings index came from the sub-indexes for shops and offices (down 0.9 percent), warehouses and factories (down 1.1 percent), and other non-residential buildings (down 0.6 percent). Lower labour costs and contractor margins, and falling material prices due to lower local demand were cited as the main reasons for the fall.

In the year to the December 2009 quarter, the non-residential buildings index fell 3.8 percent, following a 3.1 percent fall in the year to the September 2009 quarter, and a 0.1 percent fall in the year to the June 2009 quarter.

Other construction

The other construction index rose 1.4 percent in the December 2009 quarter, following rises of 0.5 percent and 1.0 percent in the September and June 2009 quarters respectively. The other construction index made the most significant upward contribution to the CGPI. Higher prices in the construction of roads and power lines drove the increase.

The other construction index rose 4.6 percent for the year to the December 2009 quarter, following rises of 4.0 percent and 5.8 percent in the years to the September 2009 and June 2009 quarters respectively.

Transport equipment

The transport equipment index rose 0.4 percent in the December 2009 quarter, down from the 0.8 percent and 1.4 percent increases in the September and June 2009 quarters respectively. The major contribution came from the cars over 1600cc sub-index (up 1.0 percent), which was driven by higher supplier prices. Declines in the buses (down 2.9 percent) and helicopters (down 8.7 percent) sub-indexes made partly offsetting downward contributions to the transport equipment index.

In the year to the December 2009 quarter, the transport equipment index rose 6.5 percent. The latest annual rise follows rises of 7.6 percent in both the years to the September 2009 and the June 2009 quarters.

Residential buildings

The residential buildings index rose 0.1 percent in the December 2009 quarter, compared with a 0.4 percent fall in the September 2009 quarter and a 0.3 percent fall in the June 2009 quarter. The main driver for the latest increase was higher prices for dwellings and out-buildings (up 0.5 percent). The rise in the dwellings and outbuildings index was partly offset by a decrease in hostels and boarding houses (down 1.2 percent), which was driven down by lower labour costs and contractor margins.

In the year to the December 2009 quarter, the residential buildings index fell 0.6 percent. This follows a 1.0 percent fall and a 0.8 percent rise in the years to the September 2009 and June 2009 quarters respectively.

Impact of exchange rates

When calculating the CGPI, prices collected on the fifteenth day of the middle month in the quarter are generally used to represent the entire quarter. Prices collected for imported goods are often denominated in foreign currencies. These prices are converted to New Zealand dollars using the exchange rates at the time of pricing.

The New Zealand dollar appreciated against four key currencies of the country's five major trading partners in the December 2009 quarter. The table below shows changes in the value of the New Zealand dollar in foreign currency denominations from the September 2009 quarter to the December 2009 quarter.

Price index development

A review of the plant, machinery, and equipment index has been implemented this quarter. For more information, please see the 'Technical notes’ section.

For technical information contact: 
Selena Eaqub or Lisa-Jane Thomsen 
Wellington 04 931 4600
Email: info@stats.govt.nz

Next release ...

Capital Goods Price Index: March 2010 quarter will be released on 18 May 2010.