Infrastructure Industry Index

The Height index shows that labour within the construction/infrastructure industry has grown at a faster rate than the overall LCI since Q1 2020, with a 21% increase opposed to the LCI with 11% pa in the same period.

Over the last three years high inflationary pressure has driven consistent high growth in labour costs within the construction sector with percentage increases between 3.8% and 4.4%.

Materials, as expected showed a spike during COVID. However, our graph shows a significant decrease from 13% down to 2% pa over the last year. This is likely due to the global economy weakening, which has taken the heat out of international commodity prices and shipping costs.

The annual growth of this index (excluding Diesel) has fallen from 9.5% to 3.76% pa since last year. This shows that the overall rate of increase for cost of construction / Infrastructure is slowing. This is reflective of the latest CPI, which had its lowest quarterly increase of 4.7% since 2021.

To highlight and hammer home the impact of inflation, take a look at our Tradies lunch box index (our index that tracks the price of a pie and can of V). For the first time in NZ history, the Tradies lunchbox has reached the double digits and is now priced at $10.00. 

After inflation peaking in Q3 of 2022 at 7.2% we have continued to see a drop with the most recent figures in Q2 of 2024 showing 3.3%. The RBNZ has responded by decreasing the OCR by 25 basis points which has lead to the banks slashing their interest rates. Although this does signify the end to a high inflationary economy, the storm has not yet subsided with businesses still facing considerable challenges and many forced to make difficult strategic decisions.

Although our Labour index has shown a consistent growth of around 3-4% over the previous 4 years, we do expect this to drop slightly as the impact of businesses being forced to restructure comes to the forefront.

Interestingly, our Transport index has shown an increase of 6% which is in line with ANZ’s NZ Truckometer index that tracks the amount of heavy vehicles on the road which tends to provide a good steer on goods production and freight in real time. This suggests that although truck traffic remains low, there are signs of an improving economy.

Heights Construction Index has continued to increase at a significantly lower rate than what we were experiencing in 2022 where it rose around 10% annually. Now just at 2.89% it sits within the RBNZ inflationary target band which suggests that we are back at a manageable position where price hikes overall are not making considerable impacts on the cost of construction.

Almost mirroring the Construction index, Heights Maintenance index shows a similar trend with the annual percentage increase sitting at just under 3% for Q2. The cost for labour and plant are the key contributors holding this percentage up with a 3.2% and 4.3% increase respectively for Q2. As we see these costs reduce over the coming months, our Construction and Maintenance index figures should follow.

Tradies will be jumping for joy, or perhaps a second pie as the rise in costs for our Tradies Lunch Box has reduced from 11.26% in Q2 of 2023 to 4.29% for Q2 2024. This equates to a net $170.38 saved over a year or just over 16 extra meals..