Output prices for all industries in the PPI fell 1.4 percent in the September 2009 quarter, following falls of 0.7 percent in the June 2009 quarter, and 1.4 percent in the March 2009 quarter. The dairy cattle farming index, the dairy product manufacturing index, and the petroleum, coal, and basic chemical manufacturing index were the prominent contributors to lower output prices in the latest quarter.
Producers Price Index Outputs
All industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Sep 2007
Dec 2007
Mar 2008
Jun 2008
Sep 2008
Dec 2008
Mar 2009
Jun 2009
Sep 2009 |
1.6
1.4
1.8
3.5
2.8
1.4
-1.4
-0.7
-1.4 |
2.0
4.0
6.1
8.5
9.8
9.9
6.5
2.1
-2.1 |
The dairy cattle farming index (down 24.3 percent) had the largest downward impact on output prices in the September 2009 quarter. The fall in the latest quarter was the largest quarterly fall since the series began in the June 1994 quarter. The latest quarterly fall followed relatively small falls of 0.1 percent and 1.5 percent in the June 2009 and the March 2009 quarters, respectively. The latest quarter's index was driven by lower farmgate prices for whole-milk. Change in the whole-milk payout is shown only in the PPI each September quarter. A new method that involves taking the most recently published figure for the forecast final payout, and showing movements in this figure on a quarterly basis will be implemented from the December 2009 quarter onwards.
In the year to the September 2009 quarter, the dairy cattle farming index fell 26.1 percent, which is the largest annual fall since the year to the June 2003 quarter which fell 27.2 percent. This compares with rises of 25.6 percent and 25.7 percent in the years to the September 2008 and September 2007 quarters, respectively.
The dairy product manufacturing index (down 10.9 percent) had the second largest downward impact on output prices in the September 2009 quarter. The fall in the latest quarter followed a 19.9 percent fall in the June 2009 quarter and a 24.3 percent fall in the March 2009 quarter. The main drivers of the index in the latest quarter were lower prices for exported dairy products such as whole-milk powder, milk and cream, cheese, and butter. In the year to the September 2009 quarter, the index fell 35.6 percent which is the largest annual fall since the series began in the June 1994 quarter. This compares with a 27.0 percent rise in the year to the September 2008 quarter, and an 11.1 percent rise in the year to the September 2007 quarter.
The petroleum, coal, and basic chemical manufacturing index (down 9.2 percent) was the third largest contributor to the fall in output prices in the September 2009 quarter. This follows consecutive falls of 8.2 percent and 18.9 percent in the June 2009 and the March 2009 quarters, respectively. The latest quarterly fall in the index was mainly driven by lower refinery fees for petroleum products. In the latest quarter, lower phosphatic fertiliser prices (due to the exchange rate and competition) also contributed to the fall in the petroleum, coal, and basic chemical manufacturing index.
In the year to the September 2009 quarter, the petroleum, coal, and basic chemical manufacturing index fell 13.9 percent – the largest annual fall since the series began in the June 1994 quarter. The latest annual fall compared with rises of 21.2 percent and 1.3 percent in the years to the September 2008 and September 2007 quarters, respectively.
The retail trade index, and the tobacco, beverage, and malt manufacturing index were among the indexes providing some off-setting impact on the overall outputs index, by recording small increases in the latest quarter. The PPI outputs index fell 2.1 percent in the year to the September 2009 quarter, recording the largest annual fall since the series began in the December 1977 quarter. The latest annual fall compared with rises of 9.8 percent and 2.0 percent in the years to the September 2008 and September 2007 quarters, respectively.
Inputs
Input prices for all industries in the PPI fell 1.1 percent in the September 2009 quarter. This follows no quarterly change in the June 2009 quarter, and a fall of 2.5 percent in the March 2009 quarter.
Producers Price Index Inputs
All industries |
| Quarter |
Percentage change from previous quarter |
Percentage change from same quarter, previous year |
Sep 2007
Dec 2007
Mar 2008
Jun 2008
Sep 2008
Dec 2008
Mar 2009
Jun 2009
Sep 2009 |
2.4
1.3
2.1
6.0
3.7
-2.2
-2.5
0.0
-1.1 |
1.9
4.3
7.3
12.3
13.6
9.7
4.7
-1.2
-5.8 |
The dairy product manufacturing index (down 20.9 percent) made the most significant downward contribution to the inputs index. This is the largest quarterly fall since a 24.0 percent decrease in the September 2002 quarter. The main driver of the fall in the September 2009 quarter was lower whole-milk prices at the farmgate. As mentioned in the Outputs commentary, the change in this whole-milk payout has been shown only in the PPI each September quarter. A new method that involves taking the most recently published figure for the forecast final payout, and showing movements in this figure on a quarterly basis will be implemented from the December 2009 quarter onwards.
Annually, from the September 2008 quarter to the September 2009 quarter, the dairy product manufacturing index fell 22.0 percent, following rises of 22.9 percent in the year to the September 2008 quarter, and 27.3 percent in the year to the September 2007 quarter.
The second most significant contribution to the inputs index came from the electricity generation and supply index. The index fell 8.2 percent, following a 10.4 percent rise in the June 2009 quarter, and a 1.5 percent fall in the March 2009 quarter. Respondents cited market conditions, higher hydro inflows, and seasonal conditions as the main reasons for the fall in electricity generation and supply prices. Lower prices for natural gas, used in the generation of electricity, also contributed to the latest quarter's fall.
On an annual basis, the electricity generation and supply index fell 32.4 percent in the year to the September 2009 quarter. This follows a 35.0 percent rise in the year to the September 2008 quarter, and a 5.2 percent fall in the year to the September 2007 quarter.
The sheet and fabricated metal product manufacturing index (down 5.2 percent) made the third most significant downward contribution to the inputs index. The fall in this index follows a 6.7 percent fall in the June 2009 quarter, and a 1.2 percent fall in the March 2009 quarter. The appreciation of the New Zealand dollar, and lower suppliers’ prices for imported iron and steel were the main drivers of the fall in the latest quarter.
In the year to the September 2009 quarter, the sheet and fabricated metal product manufacturing index fell 9.4 percent. This is the index's first decrease since a 1.3 percent fall in the year to the March 2004 quarter, and the largest fall since the series began in the June 1994 quarter. This follows rises of 23.0 percent and 3.0 percent in the years to the September 2008, and September 2007 quarters, respectively.
The largest upward contribution came from the wholesale trade index (up 5.6 percent). This follows quarterly falls of 0.1 percent in the June 2009 quarter, and 12.7 percent in the March 2009 quarter. The latest rise in the index was mainly driven by imported and domestic crude oil price rises in the mineral, metal, and chemical wholesaling index.
Despite the latest quarterly rise, the wholesale trade index fell 18.7 percent in the year to the September 2009 quarter – the largest annual fall since the series began in the June 1994 quarter. This follows a record rise of 26.3 percent in the year to the September 2008 quarter, and a fall of 2.2 percent in the year to the September 2007 quarter.
Input prices for all industries fell 5.8 percent in the year to the September 2009 quarter. This is the largest annual fall in the inputs index since the series began in the December 1977 quarter. The latest annual fall contrasts with rises of 13.6 percent in the year to the September 2008 quarter, and 1.9 percent in the year to the September 2007 quarter.
Commodities
The logs for export market index fell 10.2 percent in the September 2009 quarter, driven by the appreciation of the New Zealand dollar. The latest quarterly fall compared with falls of 6.6 percent and 0.3 percent in the June and March 2009 quarters, respectively. The fall in logs for export market in the latest quarter was the largest recorded since the December 2007 quarter. In the year to the September 2009 quarter, the index rose 17.1 percent, compared with an 8.6 percent rise in the year to the September 2008 quarter, and a 0.3 percent rise in the year to the September 2007 quarter.
The processed meat: beef index rose slightly, by 0.1 percent in the September 2009 quarter, compared with falls of 7.0 percent and 3.3 percent in the June and the March 2009 quarters, respectively. In the year to the September 2009 quarter, the processed meat: beef index fell 13.7 percent compared with a 29.6 percent rise in the year to the September 2008 quarter, and an 11.8 percent fall in the year to the September 2007 quarter.
The processed meat: sheep and lamb index rose 0.9 percent in the September 2009 quarter, compared with a 5.1 percent fall in the June 2009 quarter, and a 6.0 percent rise in the March 2009 quarter. The latest quarterly increase was driven by improved prices for exported lamb cuts. In the year to the September 2009 quarter, the processed meat: sheep and lamb index rose 9.4 percent, compared with a rise of 15.4 percent in the year to the September 2008 quarter, and a 12.5 percent fall in the year to the September 2007 quarter.
Recording the third consecutive quarterly fall, the international sea freight index fell 9.3 percent in the September 2009 quarter, driven by the exchange rate. This followed falls of 9.1 percent and 5.9 percent in the June and March 2009 quarters, respectively. In the year to the September 2009 quarter, the index fell 10.8 percent compared with a rise of 22.7 percent in the year to the September 2008 quarter, and a 26.9 percent fall in the year to the September 2007 quarter.
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Impact of exchange rates
When calculating the PPI, prices collected on the fifteenth day of the middle month in the quarter are generally used to represent the entire quarter. Prices collected for imported goods are often denominated in foreign currencies. These currencies are converted to New Zealand dollars using the exchange rate at the time of pricing.
The New Zealand dollar appreciated against all five key currencies of the country's five major trading partners in the September 2009 quarter. The table below shows changes in the value of the New Zealand dollar in foreign currency denominations from the June 2009 quarter to the September 2009 quarter.
Exchange Rates
Bank selling rates for NZ$1.00 |
| |
USA
(NZ$:US$) |
UK
(NZ$:pound) |
Australia
(NZ$:AUS$) |
Japan
(NZ$:yen) |
Europe
(NZ$:euro) |
15 May 2009
15 August 2009 |
0.5899
0.6701 |
0.3879
0.4042 |
0.7776
0.7995 |
56.5095
63.5945 |
0.4315
0.4675 |
| Percentage change |
13.6 |
4.2 |
2.8 |
12.5 |
8.3 |
Source: Westpac Banking Corporation.
Price index developments
Statistics NZ began work in 2004 on a progressive redevelopment of PPIs. This involves re-evaluating the items that are priced and the weights that are applied to them. At this stage, the redevelopment applies only to output indexes. New input indexes will be finalised once all the output indexes have been redeveloped.
The following indexes within the property and business services index (PPIQ.SUL) has been redeveloped and took effect from the September 2009 quarter:
- Real estate (PPIQ.SUL01)
- Other property services (PPIQ.SUL03).
The non-building construction index within the construction index (PPIQ.SUE) has also been redeveloped and took effect from the September 2009 quarter:
- Non-building construction (PPIQ.SUE01410).
For more information, please see the 'Technical notes'.
Pricing financial services
The output of the banking industry consists of services provided by banks and other financial intermediaries that are both explicitly and implicitly charged for. Pricing explicit services (such as, bank account fees) provided by financial intermediaries is relatively straightforward. However, pricing the intermediation services provided by financial institutions that are implicitly charged for is more problematic. Due to the complex nature of these services, there are some limitations in the approach taken to measure these services. For more information, please see the 'Technical notes'.
For technical information contact:
Lisa-Jane Thomsen or Suchindra Nanayakkara
Wellington 04 931 4600
Email: info@stats.govt.nz
Next release ...
Producers Price Index: December 2009 quarter will be released on 16 February 2010.