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Sector information summarises trends and developments in the building and housing sector. 

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Previous versions of  the building and housing sector trends reports are available on request.

Building costs and prices

Updated: 25 November 2011

Labour cost inflation low for now

The Labour Cost Index1 (LCI) for the construction industry rose 2.3% in the year to September 2011.  LCI is an indicator of the labour costs of construction. Wage growth remains stagnant in construction, leading to labour cost growth well below pre-2009 levels (Figure 10a).   However, construction labour cost inflation looks to be trending upwards.

The LCI for all industries also rose 2.0% in the year to September 2011. 

Figure 10a: Labour Cost Index (LCI) (Annual percentage change to September 2011).

Builders absorbing rising commodity costs

The Producers Price Index (PPI) for construction industry inputs rose 3.2% in the year to September 2011.  PPI-Input2 is an indicator of the non-labour costs of construction.  The  PPI-Input for all industries rose 4.7% in the year to September 2011. 

The Producers Price Index (PPI) for construction industry outputs rose 3.2% in the year to September 2011.  The PPI-Output3 is an indicator of the price of construction.  The PPI-Output for all industries rose 3.5% in the year to September 2011. 

Figure 10b: Producer Price Index (PPI) - Inputs (Annual percentage change to September 2011)

The Capital Goods Price Index (CGPI) is another indicator of the price of construction work.  The CGPI for:

  • residential construction rose 1.4% in the year to September 2011
  • non-residential construction fell 0.8% in the year to September 2011
  • civil construction rose 5.3% in the year to September 2011 .

CPGI for all industries remains the same in the year to September 2011.

  Figure 10c: Capital Goods Price Index (Annual percentage change to September 2011).

1.  The LCI is based on June 2009 quarter = 1000 in the September 2009. 

2.  The PPI-Input indices cover the prices of materials, fuels and electricity, transport and communication, commission and contract services, rent and lease of land, buildings, vehicles and plant, business services, insurance premiums less claims. The input indices exclude wages and salaries (measured in the Labour Cost Index), capital expenditure (measured in the Capital Goods Price Index), ACC levies, land tax, government licence fees, road user charges, rates, royalties, patent fees and bad debts and donations.

3. The PPI-Output indices cover the prices of primary products, manufactured goods, revenue from renting and leasing, the provision of services, capital work undertaken by own employees and margins on goods purchased for resale. The output indices exclude interest and dividends, royalties and patent fees, receipts from insurance claims, government cash grants and subsidies and GST and other indirect taxes.