Capital Goods Price Index: June 2010 quarter

Capital goods price index

Quarterly

The capital goods price index (CGPI) rose 0.1 percent in the June 2010 quarter, the first quarterly increase since the June 2009 quarter. The latest rise compares with a 0.1 percent fall in the March 2010 quarter and a 0.2 percent fall in the December 2009 quarter.

The rise in the CGPI was influenced by the sub-indexes for residential buildings (up 0.3 percent) and other construction (up 0.1 percent).          
       
The offsetting influences came from a slight fall in the prices of plant, machinery, and equipment (down 0.1 percent) and in the transport equipment index (down 0.1 percent).
     
The following table shows the amount that each asset group contributed to the all groups CGPI movement from the March 2010 quarter to the June 2010 quarter. The asset-group contributions in the June 2010 quarter were relatively small.  

 

Annual

In the year to the June 2010 quarter the CGPI fell 0.6 percent. The latest annual fall follows a 4.1 percent rise in the year to the June 2009 quarter and a 3.1 percent rise in the year to the June 2008 quarter.     

Residential buildings  

The residential buildings index (up 0.3 percent) made the most significant upward contribution to the CGPI. The latest rise follows increases of 0.1 percent in the March 2010 quarter and 0.1 percent in the December 2009 quarter.   
     
The rise in the residential buildings index was largely influenced by a price increase for dwellings and out-buildings (up 0.4 percent). 

In the year to the June 2010 quarter the residential buildings index rose 0.2 percent. The latest annual rise follows a 0.8 percent rise in the year to the June 2009 quarter and a 4.4 percent rise in the year to the June 2008 quarter.

 

 

Other construction

The other construction index (up 0.1 percent) made the second largest upward contribution to the CGPI. This index includes items like construction of roads, wharves, and pipelines. The latest rise follows a 0.3 percent rise in the March 2010 quarter and a 1.4 percent rise in the December 2009 quarter. 

The rise in the other construction index was influenced by the sub-index for construction of pipelines (up 0.8 percent). Increased manufacturers' prices, raw material costs, and general market changes were cited as the main reasons for the latest rise.

The largest offsetting impact on the other construction index came from the sub-index for construction of transport ways (down 0.3 percent).         
          
In the year to the June 2010 quarter the other construction index rose 2.4 percent. This annual rise follows a 5.8 percent rise in the year to the June 2009 quarter and a 4.9 percent rise in the year to the June 2008 quarter. The latest annual increase is the smallest increase since the year to the December 2003 quarter.


 

 

Non-residential buildings

The non-residential buildings index remained unchanged in the June 2010 quarter. The latest movement follows a 0.1 percent fall in the March 2010 quarter and a 1.0 percent fall in the December 2009 quarter. Respondents cited low local demand as the main reason for non-residential building prices remaining flat.

The other non-residential buildings sub-index (up 0.1 percent) made the largest upward contribution to non-residential building prices. This sub-index measures construction of hotels, hospitals, and education buildings.

In the year to the June 2010 quarter the non-residential buildings index fell 2.4 percent. This latest annual fall follows a 0.1 percent fall in the year to the June 2009 quarter and a 2.8 percent rise in the year to the June 2008 quarter.

 

 

 

Plant, machinery, and equipment 

The plant, machinery, and equipment index fell 0.1 percent in the June 2010 quarter, following a 0.6 percent fall in the March 2010 quarter and a 1.1 percent fall in the December 2009 quarter. This index made the largest downward contribution to the CGPI.     

The computer machinery (down 3.4 percent) sub-index had the largest downward contribution to plant, machinery, and equipment prices. Computer-related price indexes from the United States are used 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.

The sub-index for furniture (up 3.2 percent) had the largest offsetting impact on the plant, machinery, and equipment index.      
         
In the year to the June 2010 quarter the plant, machinery, and equipment index fell 2.4 percent. The latest annual fall follows an 8.4 percent rise in the year to the June 2009 quarter and a 2.2 percent rise in the year to the June 2008 quarter.

 

 

Transport equipment

The transport equipment index fell 0.1 percent in the June 2010 quarter. The latest fall follows a 0.5 percent rise in the March 2010 quarter and a 0.4 percent rise in the December 2009 quarter. 
  
The latest fall in the transport equipment index was influenced by the sub-index for commercial vehicles over 3500kg (down 0.5 percent). Respondents cited a stronger New Zealand dollar as the main reason for the fall.  
  
The offsetting contribution to the transport equipment index came from the sub-indexes for cars over 1600cc (up 0.2 percent).        

In the year to the June 2010 quarter the transport equipment index rose 1.6 percent, following a 7.6 percent rise in the year to the June 2009 quarter and a 0.1 percent fall in the year to the June 2008 quarter. 

 

 

Impact of exchange rates

When calculating the CGPI, prices collected on the 15th 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 currencies are converted to New Zealand dollars using the exchange rate at the time of pricing.

In the June 2010 quarter, the New Zealand dollar appreciated against all of the country's five major trading partners. The table below shows changes in the value of the New Zealand dollar in foreign currency denominations from the March 2010 quarter to the June 2010 quarter.

Price index development 

Next release ...

Capital Goods Price Index: September 2010 quarter will be released on 18 November 2010.