According to Statistics Canada, the Machinery and Equipment Price Index (MEPI) increased 5.4 percent in the third quarter, following a 0.8 percent decrease in the second quarter. The import component was up 6.4 percent over the period, while the domestic component rose 2.4 percent.
Prices of imported machinery and equipment are reported in US dollars and are converted to Canadian dollars. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. The Canadian dollar depreciated 6.1 percent relative to the US dollar in the third quarter compared with the second quarter.
All industries posted increases in the prices of machinery and equipment purchased in the third quarter. The largest contributor to the quarterly gain was the finance, insurance and real estate industry (+5.7 percent). The transportation and warehousing industry (+6.1 percent) and all manufacturing industry (+5.4 percent) also contributed to the quarterly increase.
Among commodities, computers and computer peripheral equipment (+5.9 percent) contributed the most to the quarterly increases of the total MEPI. Logging, mining and construction machinery and equipment (+4.3 percent), other industry-specific machinery (+6.0 percent), aircraft and aircraft engines (+6.6 percent) and commercial and service industry machinery (+5.8 percent) also contributed to the quarterly gain.
The total MEPI increased 17.3 percent in the third quarter compared with the same quarter of 2014, reflecting large quarterly price increases in the first and third quarters of 2015. The import component increased 20.7 percent and the domestic component was up 7.5 percent. The movement in the import component was partly influenced by the year-over-year depreciation of the Canadian dollar (-16.8 percent) against the US dollar. This was the largest year-over-year depreciation of the Canadian dollar since the first quarter of 2009.