Machinery prices up, building prices down

The Capital Goods Price Index (CGPI) rose 1.1 percent in the December 2008 quarter, Statistics New Zealand said today. The most significant upward contribution came from the plant, machinery and equipment index (up 3.4 percent) while falls were recorded in the residential buildings index (down 0.3 percent) and non-residential buildings index (down 0.2 percent).

The main contributor to the 3.4 percent rise in the plant, machinery and equipment index was higher prices for other special purpose machinery, mainly book binding and printing machinery (due to higher suppliers' prices and the depreciation of the New Zealand dollar); and higher prices for lifting and handling equipment, and machinery for mining, quarrying and construction (mainly due to the impact of the depreciating New Zealand dollar). In the year to the December 2008 quarter, the plant, machinery and equipment index rose 6.0 percent.

The residential buildings index fell 0.3 percent for the first time since a 0.1 percent fall in the December 1998 quarter. This quarter's fall was driven by lower prices for reinforcements and structural steel work, reduced contractors' margins, and lower prices for the construction of new houses. The non-residential buildings index fell 0.2 percent in the latest quarter, the first downward quarterly movement since a fall of 0.1 percent in the June 2000 quarter. The latest quarter's fall was mainly driven by lower prices for structural steel work and narrowed contractors' margins.

On an annual basis, the CGPI rose 4.1 percent in the year to the December 2008 quarter. This followed rises of 2.3 percent and 4.1 percent in the years to the December 2007 and the December 2006 quarters, respectively.