What the Indicators Mean

What the indicators mean

The seven components of the Dashboard have been drawn from a number of sources including BRANZ analysis, Ministry of Education data, and Statistics New Zealand data. This section explains what the different indicators mean.

  • Share of skills provided by training: The expected number of apprentices and trainees completing study each year divided by the total expected demand for each skill category for that year. These percentages tell us how big a gap there is between how many people we're training, and the number we need each year, based on the Infometrics report: Outlook for the construction industry: Part One: BETA monitoring report (2014). So for instance, a percentage of 20% for a certain skill set in 2016 means that registered training programmes are only expected to provide 20% of the demand for new people with those skills in 2016. As a result, we'll be relying on people with no formal training, recent migrants, or people who have gained training through other means, to fill the gap.
  • Liquidity ratio: Ability to service debt: Liquidity is a basic financial measure of the extent to which a business (or industry) has sufficient current assets to meet its current liabilities. We measure liquidity for four sub-sectors, showing how this has changed over the last four years. A low ratio (below 1.25) suggests that as a whole, the sub-sector is in an unhealthy situation in terms of debt servicing.
  • New residential customer service: This component of the Dashboard uses data from the annual BRANZ New House Owners’ Satisfaction Survey, and compares the latest year’s key survey results with results from the year before. Overall service is an average of scores for the 10 questions on service and quality set out in the annual survey of more than 600 new-build owners. The other two statistics come direct from the survey. The residential sector accounts for between 40% and 60% of all construction depending on our point in the economic cycle, so it's important to understand how well we are meeting customer needs.
  • Workplace injury rates: Injury rates per 1,000 workers compared to other industries and to the previous year’s performance. Health and safety is a major area of focus of industry and government, and this basic indicator helps keep track of our efforts to improve.
  • Housing affordability: This component compares overall price rises (inflation) to changes in the price of purchasing all housing as set out in the Consumers Price Index (CPI), and the BRANZ New-Build Index (NBI). The NBI compares changes in the cost to deliver a standard 200 m2 single storey house on a 500 m2 section. In other words, the NBI considers the housing affordability question from the perspective of supply price, which includes increases in the cost of land and building. The June 2006 quarter was indexed at 1000, to allow direct comparison with the CPI, which is indexed in that quarter. For instance, the March 2014 quarter had an NBI value of 1348, or 34.8% higher than in the June 2006 quarter. This means the overall cost of delivering a 200 m2 house on a 500 m2 section rose 34.8% over eight years. Over the same time, the CPI rose only 19.5%.
  • Building activity forecasts: These figures are BRANZ forecasts of gross fixed capital formation (GFCF) for the next five years. This indicator gives an idea of changes in the total amount of construction work being put in place in real terms, and can help training providers, builders and government plan for potential changes in workloads over the next several years. It is applied to the residential, non-residential, and heavy and civil sub-sectors.
  • Changes in building quality: This component estimates the change in quality of building work over time. It does this by stripping out price changes (inflation) from changes in $/m2 consent values. In other words, it aims to account for changes such as the switch to double glazing and better insulation, or in customer preferences for say, granite counter-tops. It indexes changes in (mostly materials) inputs since June 2006 by removing price changes as recorded by the relevant Capital Goods Price Index. For instance, it suggests that the quality of residential housing inputs (such as changes in insulation, finishes, or glazing) improved by 11.4% between June 2006 and June 2014. It is worth noting that this measure predominantly captures changes in materials or finishes and does not imply that the way the building is put together is any better than before. Note that the non-residential quality index should be interpreted with caution. It is highly dependent on the type of non-residential building work being done, such as farm buildings, schools, hospitals or hotels.