DAILY NEWS Sep 2, 2014 9:49 AM - 0 comments

All industries post decreases in prices of machinery & equipment purchased in 2nd quarter

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Ottawa - The Machinery and Equipment Price Index (MEPI) decreased 0.7% in the second quarter of 2014 compared with the previous quarter, reports Statistics Canada. The import component was down 1.0% over the period, while the domestic component was unchanged.

The Canadian dollar appreciated 1.2% against the US dollar in the second quarter compared with the first quarter of 2014. Variations in exchange rates can have a significant influence on the MEPI given the high weight of imported machinery and equipment in the index.

All industries posted decreases in prices of machinery and equipment purchased in the second quarter. The largest contributor to the total MEPI quarterly decrease was the finance, insurance and real estate industry (-1.0%). Both subsectors of this industry experienced declines as the finance and insurance subcomponent fell 0.8% while the rental and leasing services subcomponent decreased 1.1%. The second largest contributor to the quarterly decline was manufacturing (-0.5%).

Most commodities posted price declines in the second quarter. Among them, trucks, road tractors and chassis (-1.7%), and automobiles, excluding passenger vans (-1.5%) contributed the most to the quarterly decrease of the total MEPI.

Compared with the second quarter of 2013, the total MEPI increased 5.2%, with the import component rising 8.0% and the domestic component up 0.8%. The movement in the import component was partly influenced by the year-over-year change in the Canadian dollar (-6.2%) against the US dollar.

Upcoming changes: Basket update (2010=100) and updated classifications

Statistics Canada is undertaking two important initiatives for the Machinery and Equipment Price Index (MEPI) program and changes will be reflected in the MEPI at the end of 2014.

With the release of third quarter 2014 data, the MEPI series will be converted from a base year of 1997=100 to 2010=100. The relative importance of the basket items will be updated using the 2010 annual gross additions to capital for machinery and equipment purchases by industries in Canada.

Also, the MEPI (2010=100) will adopt the commodity and industry classifications incorporated in the current input-output tables of the Canadian System of National Accounts (CSNA) for final demand expenditures by machinery and equipment categories. With the 2012 historical revision of the CSNA, the classifications incorporated in the input-output tables published by Statistics Canada have been updated.

The update of the classifications was triggered by the need to capture the evolving structure of the Canadian economy and to align the classifications to updated international classification systems (such as the North American Industry Classification System and the North American Product Classification System). As a result, the number of industry categories used for the MEPI (2010=100) will increase from 60 to 66, while the number of commodity categories will decrease from 106 to 56. For more information regarding the changes applied to the input-output tables, see the document Modernization of the Input-output Tables at http://www.statcan.gc.ca.

CANSIM tables 327-0041 and 327-0042, based on 1997=100, will be terminated with the release of data for the second quarter of 2014. New tables, based on 2010=100, with new vectors, will be made available in CANSIM with the release of data for the third quarter of 2014.

Concordance information between the old CANSIM vectors and the new CANSIM vectors is available at http://www.statcan.gc.ca. For more information, contact Statistics Canada toll-free at 1-800-263-1136 or e-mail infostats@statcan.gc.ca.

The MEPI provides quarterly estimates of price changes for machinery and equipment purchased by industries in Canada.

The contribution of a given sub-aggregate to the composite price change depends on both the price change exhibited by the sub-aggregate and its importance in the basket, as measured by the weight.

With each release, data for the previous four quarters may have been revised. The index is not seasonally adjusted.

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