Capital goods prices ease slightly

The capital goods price index (CGPI) fell 0.2 percent in the December 2009 quarter, Statistics New Zealand said today. The index measures the change in price of new capital equipment. In the year to the December 2009 quarter, the CGPI rose 0.9 percent, the lowest annual increase since the September 2003 quarter.

The major downward contribution to the CGPI came from the plant, machinery, and equipment index, which fell 1.1 percent in the December 2009 quarter. That index measures items such as computer machinery, furniture, and machinery for mining, quarrying, and construction. “A stronger New Zealand dollar helped drive down prices for many capital plant and machinery assets,” said prices manager Chris Pike.

The second most significant downward contribution to the CGPI came from the non-residential buildings index, which fell 1.0 percent in the December 2009 quarter, adding to the four successive quarterly falls that started in the December 2008 quarter. Lower labour costs and contractor margins, and falling material prices due to lower local demand were cited as the main reasons for the latest fall.

The other construction index, which measures changes in infrastructure prices such as roads, rose 1.4 percent in the December 2009 quarter, following rises in the September and June 2009 quarters.

The CGPI measures the change in price of physical capital goods purchased by New Zealand producers of goods and services. Capital goods are assets used to produce goods and services for more than one year.

Geoff Bascand 16 February 2010
Government Statistician