Producer cost indices for construction

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Paru le : 18/08/2018
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Description

Description

The producer cost indices for construction are composite indices of costs which are derived from several cost items in an analytical accounting process similar to the “KLEMS” approach used by economists in relation to productivity (where K = capital for “equipment”, L = labour, E = energy, M = materials, S = services for “miscellaneous costs”), to which we have added T = transport. They are the statistical twins of the building (BT) indices, civil engineering (TP) indices, and various indices for construction, which are used for contract escalation. The producer cost indices for constrution are subject to revision and are used for national accounts, macroeconomic analysis and international comparisons.

History

The Council Regulation (EC) No 1165/98 of 19 May 1998 concerning short-term statistics, amended by the regulation No 1158/2005, asks in its annex “B - construction” to provide the variables No 320, 321 and 322, which correspond to “construction costs”, with a decomposition between “material costs” and “labour costs”. Those variables, which are to be provided as indices, must correspond to the construction of new residential buildings.

More broadly, deflators are needed for national accounts and macroeconomic analysis. However, the construction sector is only partially covered by the producer price indices (see construction of new residential buildings PPI and maintenance and improvement of existing dwellings PPI- IPEA). Until now, the building (BT) indices, civil engineering (TP) indices, and various indices for construction (whose responsibility was transferred to Insee by the Decree No 2014-114 of February 7, 2014 and the circular of May 16, 2014 relative to BT, TP and various construction indices (pdf file), were used as deflators, but they cannot be revised and their requirement to be published during the third month following the month under review leads to some temporal gaps (notably for labour costs) which are suboptimal for statistical works. The producer cost indices for construction are revised, furthermore they follow a calculation method similar to the one used for the BT and TP indices.

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