Gross Fixed Capital Gross Fixed Capital Formation Formation

ConceptsConcepts

Total value Total value ofof acquisitions, less disposals, of fixed assets acquisitions, less disposals, of fixed assets during the accounting period, plus certain additions to the during the accounting period, plus certain additions to the value of non-produced assets owing to the productive value of non-produced assets owing to the productive activity of institutional units. activity of institutional units.

Fixed assets are tangible or intangible assets which are Fixed assets are tangible or intangible assets which are produced as outputs from production processes and which produced as outputs from production processes and which are themselves used repeatedly or continuously in other are themselves used repeatedly or continuously in other production processes for more than one year.production processes for more than one year.

Tangible Fixed AssetsTangible Fixed Assets Acquisitions, less disposals, of new and existing tangible fixed Acquisitions, less disposals, of new and existing tangible fixed

assets, sub-divided by type of asset into:assets, sub-divided by type of asset into:

Dwellings;Dwellings;

Other buildings and structures;Other buildings and structures;

Machinery and equipment; Machinery and equipment;

Cultivated assets – trees and livestock - that are used Cultivated assets – trees and livestock - that are used

repeatedly or continuously to obtain products such as fruit, repeatedly or continuously to obtain products such as fruit,

rubber, milk, etc.rubber, milk, etc.

Intangible Fixed AssetsIntangible Fixed Assets

Aquisitions, less disposals of new or existing intangible Aquisitions, less disposals of new or existing intangible fixed assets, sub-divided by type of asset into:fixed assets, sub-divided by type of asset into:

Mineral exploration;Mineral exploration;

Software;Software;

Entertainment, literary or artistic originals; Entertainment, literary or artistic originals;

Other intangible fixed assets.Other intangible fixed assets.

OthersOthers

Major improvements to non-produced tangible assets, Major improvements to non-produced tangible assets,

including land.including land.

Costs of transfers of ownership of produced and non-Costs of transfers of ownership of produced and non-

produced assets.produced assets.

Three main categories:Three main categories:

Residential Construction Residential Construction

Non-Residential Construction Non-Residential Construction

Machinery and EquipmentMachinery and Equipment

Gross Fixed Capital FormationGross Fixed Capital FormationBusiness and GovernmentBusiness and Government

Business Residential Business Residential ConstructionConstruction

Millions of dollarsMillions of dollars

20032003 20042004 20052005 20062006

New ConstructionNew Construction 3672436724 4213642136 4392743927 4765247652

Alterations and Alterations and ImprovementsImprovements 2420924209 2710027100 3027030270 3363133631

Transfer CostsTransfer Costs 1178111781 1368213682 1559415594 1710317103

TotalTotal 7271472714 8291882918 8979189791 9838698386

Singles, doubles, rows and apartments – (Work-put-in-Singles, doubles, rows and apartments – (Work-put-in-place)place)

housing starts – Central Mortgage and Housing housing starts – Central Mortgage and Housing Corporation ( CMHC )Corporation ( CMHC )

average value of building permits – Building Permits average value of building permits – Building Permits SurveySurvey

work put in place coefficientswork put in place coefficients

New Residential New Residential ConstructionConstruction

Other New ConstructionOther New Construction Cottages, mobile homes and conversions Cottages, mobile homes and conversions

Building Permits SurveyBuilding Permits Survey

Supplementary costsSupplementary costs

Goods and services TaxGoods and services Tax

Provincial Sales TaxProvincial Sales Tax

Land developer feesLand developer fees

Other supplementary costsOther supplementary costs

Data published on a monthly basis by Investment and Capital Data published on a monthly basis by Investment and Capital Stock Division ( ICSD)Stock Division ( ICSD)

AlterationsAlterations and Improvementsand Improvements

Included are all works that improve the quality of the Included are all works that improve the quality of the dwelling and extend its service lifedwelling and extend its service life

e.g. - replacement of carpets e.g. - replacement of carpets

- replacement of roof - replacement of roof

- installation of fixed electrical home appliances - installation of fixed electrical home appliances

Repair work is recorded in personal consumer Repair work is recorded in personal consumer expenditures under services. expenditures under services.

Alterations and Alterations and ImprovementsImprovements

(Annual Estimates)(Annual Estimates) National and provincial annual estimates National and provincial annual estimates

Renovation expenditures undertaken by: Renovation expenditures undertaken by:

Owner – occupantsOwner – occupants

LandlordsLandlords

Cottage ownersCottage owners

RentersRenters

Survey of Household Spending –SHSSurvey of Household Spending –SHS Homeowners Repairs and Renovations Survey - HRRSHomeowners Repairs and Renovations Survey - HRRS

Alterations and Improvements

0

5

10

15

20

25

30

35

2001 2002 2003 2004 2005

Bill

ion

s o

f d

olla

rs

Famex/SHS HRRS IEAD

FAMEX /SHS – Family Expenditure Survey or Survey of FAMEX /SHS – Family Expenditure Survey or Survey of Household Household SpendingSpendingHRRS – Homeowners Repair and Renovations Survey HRRS – Homeowners Repair and Renovations Survey (discontinued in 2002)(discontinued in 2002)IEAD – SNA estimateIEAD – SNA estimate

Building permits for renovations (source: ICSD )Building permits for renovations (source: ICSD )

Sales of building materials such as Sales of building materials such as building supplies, building supplies, metal products, metal products, lumber and millwork. lumber and millwork.

( source: Wholesale Trade Survey )( source: Wholesale Trade Survey )

And information for home furniture stores, home And information for home furniture stores, home centres and hardware stores and other building centres and hardware stores and other building material and garden equipment dealers. (source: material and garden equipment dealers. (source: Retail Trade Survey )Retail Trade Survey )

Alterations and Improvements Alterations and Improvements (Quarterly Sources)(Quarterly Sources)

Annual sources of data: Annual sources of data: Real Estate Agents and Brokers SurveyReal Estate Agents and Brokers Survey Multiple Listing Service – MLSMultiple Listing Service – MLS Survey of Household Spending – SHSSurvey of Household Spending – SHS

Quarterly sourceQuarterly source Multiple Listing Service – MLSMultiple Listing Service – MLS

the number of units sold andthe number of units sold and the average sale price.the average sale price.

Ownership Transfer CostsOwnership Transfer Costs

DeflationDeflation

New residential constructionNew residential construction

New House Price Index – NHPI excluding land (Prices New House Price Index – NHPI excluding land (Prices Division)Division)

Single family dwellingsSingle family dwellings Semi-detached dwellingsSemi-detached dwellings Row housesRow houses

Apartment Building Construction Price IndexApartment Building Construction Price Index ApartmentsApartments

Alterations and Improvements:Alterations and Improvements: Renovations Price Index (estimated in IEAD)Renovations Price Index (estimated in IEAD)

Cost of Labour ( 60% ) ( Survey of Employment, Cost of Labour ( 60% ) ( Survey of Employment, Payrolls and Hours)Payrolls and Hours)

Cost of Materials ( 40% ) ( Materials by type such Cost of Materials ( 40% ) ( Materials by type such as lumber, pipes, etc. )as lumber, pipes, etc. )

Transfer CostsTransfer Costs Indexed average selling price of existing homes sold Indexed average selling price of existing homes sold

from Multiple Listing Services (MLS)from Multiple Listing Services (MLS)

DeflationDeflation

Non-Residential Non-Residential ConstructionConstruction

New non-residential construction (work put in place)New non-residential construction (work put in place)

Additions and major renovationsAdditions and major renovations

Conversions and alterations that extend the life of an Conversions and alterations that extend the life of an existing assetexisting asset

Transfer costsTransfer costs

Capitalized costs (architectural, legal and engineering fees Capitalized costs (architectural, legal and engineering fees and interest)and interest)

Total Non-residential ConstructionTotal Non-residential Construction

Millions of DollarsMillions of Dollars 2003 2004 2005 2006

Buildings2723

7 29867 32388 35914

Engineering4702

9 53477 65175 78056

Highways 7303 7693 9283 10650

Railways 905 970 1172 1338

Other engineering

38821 44814 54720 66068

Total7426

6 83344 97563 113970

Business & Public Business & Public AdministrationsAdministrations

Two categoriesTwo categories

Building construction Building construction e.g. hotels, office buildings, railway stations, schools e.g. hotels, office buildings, railway stations, schools and shopping centresand shopping centres

Engineering constructionEngineering constructione.g. bridges, roads, highways, waterworks, sewage e.g. bridges, roads, highways, waterworks, sewage systems, systems, airports, transmission lines, oil well drilling, , oil well drilling, mine development, railway tracks, etc.mine development, railway tracks, etc.

Annual sources of dataAnnual sources of data Input/Output tablesInput/Output tables Capital Expenditure Survey (CES), Actual, Preliminary Capital Expenditure Survey (CES), Actual, Preliminary

and Intentions Estimatesand Intentions Estimates Quarterly projectors and related indicatorsQuarterly projectors and related indicators

Quarterly sources of dataQuarterly sources of data There is no quarterly survey.There is no quarterly survey. Related indicators are used to measure non-residential Related indicators are used to measure non-residential

construction for the current year.construction for the current year.

Sources of DataSources of Data

Total Construction Activity is obtained by combining data on:Total Construction Activity is obtained by combining data on:

Material costs (shipments - exports + imports + ∆ Material costs (shipments - exports + imports + ∆ inventories) inventories)

+ Labour costs (employment, hours and average earnings)+ Labour costs (employment, hours and average earnings)

+ Overhead costs and profits+ Overhead costs and profits

= Total value of construction activity= Total value of construction activity

- Estimates of residential construction (New Construction, - Estimates of residential construction (New Construction, A&I)A&I)

+ Value added in oil and gas drilling+ Value added in oil and gas drilling

= Value of spending on non-residential construction= Value of spending on non-residential construction

Global ApproachGlobal Approach

Non Residential Non Residential ConstructionConstruction

Resulting estimates are compared with annual estimates Resulting estimates are compared with annual estimates from the Capital Expenditure Survey and the survey by from the Capital Expenditure Survey and the survey by asset type asset type

Quarterly estimates are benchmarked during the annual Quarterly estimates are benchmarked during the annual revision cyclerevision cycle

Annual estimates reflect the most recent data from Input-Annual estimates reflect the most recent data from Input-Output tablesOutput tables

Detailed approachesDetailed approaches

I. Buildings:I. Buildings:

Institutional, industrial and commercial non-residential Institutional, industrial and commercial non-residential construction (ICSD) based on monthly building permit construction (ICSD) based on monthly building permit values and monthly work put in place (WPIP) values and monthly work put in place (WPIP) coefficientscoefficients

The monthly Building Permits Survey of Canadian The monthly Building Permits Survey of Canadian municipalities collects data on the value of municipalities collects data on the value of construction intentions for buildings in the non-construction intentions for buildings in the non-residential sector and the number of dwellings residential sector and the number of dwellings authorized and value of construction projects in the authorized and value of construction projects in the residential sector. residential sector.

The WPIP coefficients measure, by quarter of start, The WPIP coefficients measure, by quarter of start, by province and by type of building, the volume of by province and by type of building, the volume of work normally executed in each construction work normally executed in each construction period. period.

Detailed ApproachesDetailed Approaches

II. Engineering:II. Engineering:

Highways:Highways: Material costs based on asphalt sales in Material costs based on asphalt sales in

cubic metres * Industry Product Price Index cubic metres * Industry Product Price Index (IPPI) for asphalt(IPPI) for asphalt

Labour costs (SEPH)Labour costs (SEPH)

Railways:Railways: Material costs (e.g. ties, sand, stone, steel, Material costs (e.g. ties, sand, stone, steel,

etc.) etc.) Labour costs (SEPH) Labour costs (SEPH)

Detailed ApproachesDetailed Approaches Other engineering

Material costs

iron and steel pipes, other metal building products, wires and cables, concrete products, prefabricated metal structures, glass products, etc.

Labour costs based on estimates of Hours Average weekly earnings Number of employees.

Information based on Labour Force Survey ( LFS ) and Survey of Employment, Payrolls and Hours ( SEPH )

Non Residential Non Residential ConstructionConstruction

Other information used:

Construction estimates reported in the Quarterly Survey of Financial Statistics for Enterprises (large companies in mining, telecommunications, railways…etc.)

Capital spending by provincial electric utilities – Public Institutions Division

Cubic metres drilled in the oil and gas industry – Industry Accounts Division – Monthly GDP Monthly GDP

Department of Natural Resources (general exploration Department of Natural Resources (general exploration expenditures )expenditures )

Non-Residential Building Construction Price Indexes Non-Residential Building Construction Price Indexes (commercial, industrial and institutional) – Prices (commercial, industrial and institutional) – Prices DivisionDivision

The Non-residential Building Construction Price Index The Non-residential Building Construction Price Index (NRBCPI) is a quarterly series measuring the changes (NRBCPI) is a quarterly series measuring the changes in contractors' selling prices of non-residential in contractors' selling prices of non-residential building construction (i.e. commercial, industrial and building construction (i.e. commercial, industrial and institutional)institutional)

DeflationDeflationBuildingsBuildings

DeflationDeflationEngineeringEngineering

In the absence of output price indexes – Input price In the absence of output price indexes – Input price indexes are constructed in IEAD:indexes are constructed in IEAD:

Material costs:Material costs: IPPI for prefabricated metal building and structure, IPPI for prefabricated metal building and structure,

line pipe, other insulated wires and cables, concrete line pipe, other insulated wires and cables, concrete basic products, sand, stone, ready-mix concrete, basic products, sand, stone, ready-mix concrete, etc.etc.

Labour costs:Labour costs: Average weekly earnings (SEPH)Average weekly earnings (SEPH)

Overhead costs:Overhead costs: Average weekly earnings indexes and consumer Average weekly earnings indexes and consumer

price indexesprice indexes

Machinery and EquipmentMachinery and Equipment

Spending on durable and tangible goods that have a Spending on durable and tangible goods that have a productive life of one year or more (whether owned or productive life of one year or more (whether owned or leased) ileased) including:

purchase, construction and installation costs

feasibility studies, tooling, progress payments

exploration and development costs

net portion of used assets

Business Machinery and EquipmentBusiness Machinery and Equipment

2003 2004 2005 2006

Furniture 4046 4557 4882 5348

Agricultural Machinery 2972 2938 3108 2644

Industrial Machinery 20357 21606 23974 25128

Computers 8223 9315 9632 10072

Software 10806 11000 11364 12053

Automobiles 6465 6216 6353 6620

Trucks 11337 12110 13140 13679

Other transportation 5089 5338 6780 6532

Telecommunication 6189 5979 5728 5926

Other 5347 5376 5648 5797

Total 80831 84435 90609 93801

Sources of DataSources of Data(Annual)(Annual)

Benchmark data are from the final demand matrix of Benchmark data are from the final demand matrix of the Input-Output tables (IOT). the Input-Output tables (IOT).

Current estimates are based on the Capital Current estimates are based on the Capital Expenditures Survey Actual, Preliminary and Intentions Expenditures Survey Actual, Preliminary and Intentions of Investment and Capital Stock Division and of Investment and Capital Stock Division and

The sum of the quarterly estimates coming from a The sum of the quarterly estimates coming from a Supply Disposition approach.Supply Disposition approach.

Sources of DataSources of Data(Quarterly)(Quarterly)

Supply / Disposition model:Supply / Disposition model:

GFME = GO + M – X + change in inventories, whereGFME = GO + M – X + change in inventories, where

GO - gross output estimated using shipmentsGO - gross output estimated using shipmentsM - imports from International Trade DivisionM - imports from International Trade Division

X - exports from International Trade DivisionX - exports from International Trade Division

Done at a very detailed level (39 groups), such as for Done at a very detailed level (39 groups), such as for

Telecommunication equipmentTelecommunication equipment Telephone and related equipment including facsimileTelephone and related equipment including facsimile Broadcasting and radio communication equipmentBroadcasting and radio communication equipment Radar & radio navigation equipmentRadar & radio navigation equipment

( Re. Supply/disposition models sent to the NBS on March 2007 )( Re. Supply/disposition models sent to the NBS on March 2007 )

Sources of DataSources of Data(Quarterly)(Quarterly)

Industrial machineryIndustrial machinery

Machine toolsMachine tools Conveyors, elevators & hoisting machineryConveyors, elevators & hoisting machinery Packaging and bottling machineryPackaging and bottling machinery Construction & mining machineryConstruction & mining machinery Logging, pulp & paper industry machineryLogging, pulp & paper industry machinery Power generation & marine prop., non-Power generation & marine prop., non-

electricelectric Electrical generators & motorsElectrical generators & motors

Sources of DataSources of Data(Quarterly)(Quarterly)

Other transportation equipmentOther transportation equipment

AircraftAircraft Commercial trailers & semi-trailersCommercial trailers & semi-trailers Truck & bus bodies & cargo containersTruck & bus bodies & cargo containers Locomotive, railway & urban trans. rolling Locomotive, railway & urban trans. rolling

stockstock Ships, boats & parts, excl. pleasureShips, boats & parts, excl. pleasure

And other groupsAnd other groups

Investment in Cars and Investment in Cars and TrucksTrucks

A more direct approach is used to estimate A more direct approach is used to estimate investment in cars and trucks:investment in cars and trucks:

Total sales by type from Survey of New Motor Vehicle Total sales by type from Survey of New Motor Vehicle SalesSales

Government and business shares based on data from Government and business shares based on data from Motor Vehicles Manufacturers Association.Motor Vehicles Manufacturers Association.

Software InvestmentSoftware Investment Own account softwareOwn account software Pre-packaged softwarePre-packaged software Custom-design softwareCustom-design software

Own-account software ( software developed by in-house Own-account software ( software developed by in-house employees to meet specific organization needs ) is based on employees to meet specific organization needs ) is based on the labour costs of computer programmers and system the labour costs of computer programmers and system analysts and other costs (non-salary) of in-house software analysts and other costs (non-salary) of in-house software development.development.

Investment in pre-packaged and custom-design software is Investment in pre-packaged and custom-design software is estimated residually (domestic production, plus imports, plus estimated residually (domestic production, plus imports, plus margins, less exports, less personal expenditure). margins, less exports, less personal expenditure).

DeflationDeflation

Machinery and equipment price indexes (MEPIs) are Machinery and equipment price indexes (MEPIs) are used for all commodities except computers and software. used for all commodities except computers and software. The MEPI tracks price movements on a domestic and The MEPI tracks price movements on a domestic and imported basis (producer price indexes published by the imported basis (producer price indexes published by the U.S. Bureau of Labor Statistics are used for the import U.S. Bureau of Labor Statistics are used for the import component).component).

The Machinery and Equipment Price Index (MEPI) The Machinery and Equipment Price Index (MEPI) provides quarterly estimates of price changes for provides quarterly estimates of price changes for machinery and equipment purchases, relative to annual machinery and equipment purchases, relative to annual gross additions to capital by Canadian Industry of gross additions to capital by Canadian Industry of purchase. purchase.

DeflationDeflation The deflator for computers is a weighted average of import The deflator for computers is a weighted average of import

and export computer price indexes. and export computer price indexes.

Own-account software is deflated using a fixed weighted Own-account software is deflated using a fixed weighted average of hourly earnings of programmers and systems average of hourly earnings of programmers and systems analysts and an index of costs of non-labour inputs. analysts and an index of costs of non-labour inputs.

The Commercial Software Price Index from Prices Division The Commercial Software Price Index from Prices Division is used to deflate pre-packaged software.is used to deflate pre-packaged software.

Custom-design software is deflated using a weighted Custom-design software is deflated using a weighted average of the pre-packaged and own-account price average of the pre-packaged and own-account price indexes.indexes.

Total Investment on Plant and Equipment, Total Investment on Plant and Equipment, 20052005

0

50000

100000

150000

200000

250000

MNE Non Res Total

Mill

ion

s o

f d

olla

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2005 Intentions 2005 Preliminary 2005 Actual