Capital Goods Price Index: September 2009 quarter

Capital goods price index

The Capital Goods Price Index (CGPI) fell 0.4 percent in the September 2009 quarter. The latest fall followed rises of 0.3 percent in the June 2009 quarter and 1.2 percent in the March 2009 quarter.

Four out of six asset groups in the CGPI fell in the September 2009 quarter. The most significant downward contribution to the CGPI came from the non-residential buildings index (down 1.4 percent). Further downward contributions came from the plant, machinery, and equipment index (down 0.6 percent), the residential buildings index (down 0.4 percent), and the land improvements index (down 0.4 percent). The major offsetting influences came from a rise in the transport equipment index (up 0.8 percent) and the other construction index (up 0.5 percent).

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

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

The CGPI rose 2.3 percent from the September 2008 quarter to the September 2009 quarter. The increase followed rises of 3.8 percent in the year to the September 2008 quarter and 2.3 percent in the year to the September 2007 quarter. The latest rise is the smallest in the index since the December 2007 quarter.

Non-residential buildings 

The non-residential buildings index was the most significant downward contributor to the CGPI index, falling 1.4 percent in the September 2009 quarter. This followed falls of 1.1 percent in the June 2009 quarter and 0.4 percent in the March 2009 quarter. The largest downward contributors were the sub-indexes for warehouses and factories (down 3.2 percent) and for shops and offices (down 1.0 percent). Lower labour and material costs for steel reinforcing and structural steelwork drove the falls in these sub-indexes.

In the year to the September 2009 quarter, the non-residential buildings index fell 3.1 percent, which is the largest annual fall since the series began in the December 1989 quarter. This fall followed rises of 4.0 percent in the year to the September 2008 quarter and 1.7 percent in the year to the September 2007 quarter.

Plant, machinery, and equipment

The plant, machinery, and equipment index was the second most significant downward contributor to the CGPI. This index fell by 0.6 percent in the September 2009 quarter, following rises of 0.9 percent in the June 2009 quarter and 2.7 percent in the March 2009 quarter.

The fall in the plant, machinery, and equipment index was primarily driven by falls in the following indexes: other special purpose machinery (down 3.5 percent), machinery for mining, quarrying, and construction (down 3.4 percent), and computer machinery (down 1.7 percent). Respondents cited the appreciating New Zealand dollar helping to lower the prices for these assets.

In the year to the September 2009 quarter, the plant, machinery, and equipment index rose 6.5 percent. This compares with rises of 3.1 percent in the year to the September 2008 quarter, and 0.3 percent in the year to the September 2007 quarter.

Residential buildings

The residential buildings index was the third most significant downward contributor to the CGPI. The residential buildings index fell 0.4 percent in the September 2009 quarter, following falls of 0.3 percent in the June 2009 quarter and 0.1 percent in the March 2009 quarter. Lower prices for apartment buildings (due to lower labour and material costs for steel reinforcing and structural steelwork) drove the latest fall.

In the year to the September 2009 quarter, the residential buildings index fell by 1.0 percent. This fall is the first annual decline in 10 years. The fall followed a rise of 4.4 percent in the year to the September 2008 quarter and 4.8 percent in the year to the September 2007 quarter.

Transport equipment

The transport equipment index made the most significant upward contribution to the CGPI, with a rise of 0.8 percent in the latest quarter. This rise partly offset falls in the non-residential buildings; plant, machinery, and equipment; and residential buildings indexes. The rise in the transport equipment index followed increases of 1.4 percent in the June 2009 quarter and 3.8 percent in the March 2009 quarter. The major contributor to the latest quarterly increase came from the cars over 1600cc index (up 2.0 percent). Respondents cited higher supplier prices as the main cause for the rise in prices.

In the year to the September 2009 quarter, the transport equipment index rose 7.6 percent. This annual rise followed a rise of 0.8 percent in the year to the September 2008 quarter and a fall of 0.6 percent in the year to the September 2007 quarter.

Other construction

The other construction index made the second most significant upward contribution to the CGPI, rising 0.5 percent in the September 2009 quarter. The increase followed rises of 1.0 percent in the June 2009 quarter and 1.6 percent in the March 2009 quarter.

In the year to the September 2009 quarter, the other construction index rose 4.0 percent. This followed increases of 5.7 percent in the year to the September 2008 quarter and 3.7 percent in the year to the September 2007 quarter.

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 currencies are converted to New Zealand dollars using the exchange rate at the time of pricing.

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

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

Next release ...

Capital Goods Price Index: December 2009 quarter will be released on 16 February 2010.