Data quality, concepts and methodology: Machinery and equipment price indexes

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(Tables 327-0041, 327-0042, 1997=100, quarterly, 1997 to present)

Introduction

The Machinery and Equipment Price Index (MEPI) measures price change for annual gross additions to capital for machinery and equipment by industry of purchase. Price indexes are calculated for industries, major groups of industries, and the total for all industries, and are also calculated for commodities. Price movement is measured on a domestic and an import basis.

1. The industry and commodity designations used are those of the Input-Output Tables of the Canadian System of National Accounts. The classification system is the 1997 North American Industry Classification System (NAICS).
2. Industry total indexes are presented in table 8-1 ; commodity detail is presented in table 8-2.

Characteristics

Prices used

Prices for domestic machinery and equipment are manufacturers' selling prices free on board (FOB) plant on new orders as of the middle of the month.

Prices for imported equipment are represented by the producer price indexes of the U. S. Bureau of Labor Statistics, and by a few price series from other foreign countries.

Adjustments to price indexes

Domestic and foreign price indexes are adjusted for changes in the effective rate of GST. The effective rate is the net GST tax (the tax levied on a commodity in a particular industry minus the rebated portion) divided by the value of the purchase. For most industries, the effective GST rate approaches zero per cent. Foreign price indexes are also adjusted for changes in exchange rates and custom tariffs where applicable.

Derivation of weights

1. The expenditure weights for the 51 industries and 106 commodities represent capital investment for the year 1997, valued at 1997 purchaser prices. They were derived from Input-Output data, which were themselves derived largely from the series of capital expenditure by industry, reported in the annual survey, Capital and Repair Expenditures, Actual, Preliminary Actual and Intentions (survey number 2803) Investment and Capital Stock Division.
2. In general, below the commodity level of detail, equal weights were assigned to component indexes.

Index formula

From 1997 forward, the MEPI series are fixed-weighted price indexes of the general type described in the introduction to this catalogue, with both the time and weight base being 1997.

Revisions

The most recent four quarters are subject to revision.

Historical data

Historical 1971=100 quarterly series are publicly available on CANSIM in tables 327-0021, 327-0022 and 327-0023.

Historical 1986=100 quarterly series are publicly available on CANSIM in tables 327-0013, 327-0014 and 327-0016.

Reference documents and further reading

For further information, contact Dissemination Unit at telephone: 613-951-4550, toll-free: 1-888-951-4550, fax: 613-951-3117, e-mail: ppd-info-dpp@statcan.gc.ca, Producer Prices Division, Statistics Canada, Ottawa, Ontario, K1A 0T6.

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