SR254 Firm productivity variations (2018)

The research examines the variations in productivity and profit margins between construction firms at a sub-industry level. It finds a large spread in productivity and profits within and between sub-industries. Firm owners can use the charts within the report to compare their profit performance with other firms in the same sector.

Productivity performance in the construction industry is poor and the industry trends compare unfavourably with other sectors of the economy. This research identifies labour productivity at a sub-industry level within the construction industry, indicating those sectors that underperform. Profit ratios are also provided, and perhaps unexpectedly a negative correlation was found between average sub-industry productivity and average profitability.

Data from the SNZ Business Operation Survey 2009 was used to compare with productivity performance but was insufficiently disaggregated to arrive at useful conclusions. Further work at a firm level, using longitudinal business data, is recommended to see how a firm’s behaviour affects productivity performance.