Height Construction and Infrastructure Indices

Making informed and effective business and procurement decisions is important. A key part of this involves examining industry and cost trends. These are constantly changing due to domestic and international events, political decisions, and the global and local economy.

Understanding cost trends within your industry is vital for making well-informed decisions about current and future projects. It assists with reducing risk and increasing governance and stakeholder confidence. 

As industries evolve, monitoring an industry cost breakdown index helps you to understand the impact of changes on your business, enhancing your focus on what is important to enable you to adjust your strategies and plan accordingly.

Height have developed two indices as below that track cost trends across our core industries: infrastructure and construction. 

To discuss further any of the trends and how they might impact your organisation, get in touch today.

Construction index
Values

The Height Construction Index tracks cost changes with a custom weighting for core components of construction work: materials, labour, diesel, transport, plant, and consulting services.

It tracks these categories over time and helps create a trend for businesses wanting to understand more about the cost breakdown specifically focused on construction and infrastructure.

Construction index
Annualised % change

The Height Construction Index tracks cost changes with a custom weighting for core components of construction work: materials, labour, diesel, transport, plant, and consulting services.

It tracks these categories over time and helps create a trend for businesses wanting to understand more about the cost breakdown specifically focussed on construction and infrastructure.

This graph represents the year on year percentage increase.

Maintenance index
Values

The Height Maintenance Index tracks cost changes for core components of maintenance work: materials, labour, and plant.

The weighting for each category is based on real experience with our clients, supported by Height’s expert knowledge and expansive research within industry.

Maintenance index
Annualised % change

The Height Maintenance Index tracks cost changes for core components of maintenance work: materials, labour, and plant.

The weighting for each category is based on real experience with our clients, supported by Height’s expert knowledge and expansive research within industry.

This graph represents the year on year percentage increase.

  • Analysis for Q3 2023

    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.

  • Analysis for Q1 2024

    Our construction index saw a slight increase of 2.6% from Q1 2023 - Q1 2024 which is a significant reduction on the 7% a year prior. This is likely due to supply vs demand beginning to find an equilibrium after the disruptions over previous years. This softening in the rise in costs will be welcome news for the construction industry.

    The maintenance index also saw an increase of 2.9% which is again, a significant reduction on the 6.1% for the previous year. This echoes the construction index and in this case the cooling of plant and material costs have been the dominant factors in driving the reduction.

    The new National government is now well into their first year and their priorities have been made clear (especially through their recent budget announcement). Businesses should see an increase in approved infrastructure projects over the next five years ($68b forecasted) which would likely see a further increase in demand and therefore lifting our infrastructure index percentage.

    Labour continues to see an increase of around 4% within both construction and infrastructure. Noting the government crackdown on “wasteful spending”, New Zealand may see an increase in unemployment leading to a decrease in our labour index. However, the current cost of living crisis continues to challenge that rhetoric and businesses are continuously being forced to keep their wages rising to help employees through this high inflationary economy.

     

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