MRO Magazine

Machinery and equipment prices down in third quarter from a year ago

Ottawa, ON -- Statistics Canada's Machinery and Equipment Price Index (MEPI) stood at 89.8 (1997=100) in the third ...


November 17, 2006
By MRO Magazine

Ottawa, ON — Statistics Canada’s Machinery and Equipment Price Index (MEPI) stood at 89.8 (1997=100) in the third quarter of 2006, down 0.2% from the previous quarter. The import component index declined 0.5%, while the domestic series registered no index movement. The total MEPI was down 3.9% compared to the third quarter of 2005. The import index fell 5.7% compared with the same quarter a year earlier, while the domestic index declined 0.8%.

Across industries, lower prices for machinery and equipment purchased by services industries contributed most to the decline in the MEPI in the third quarter. Lower indexes in these industries were observed, notably in finance, insurance and real estate and other services excluding public administration. Indexes for most goods-producing industries increased slightly, but not by enough to offset declines in the service sector. Also, the change in the GST rate from 7% to 6% in July 2006 is reflected in the index calculations.

The service sector was affected more by the tax change than the goods producing sector. This occurred because service industries recover less in GST rebates and consequently have a higher effective tax rate.

Among commodities, price decreases for automobiles, excluding passenger vans (-3.8%), trucks, road tractors and chassis (-3.1%) and computers and peripherals equipment such as terminals, printers and storage devices (-3.7%) influenced a lower total index.
The U.S. dollar depreciated very slightly (-0.1%) against its Canadian counterpart in the third quarter of 2006, ending a run of four consecutive quarters of significant declines in value. The influence of the exchange rate on the import index was lessened as a result.