According to Statistics Canada, the Machinery and Equipment Price Index (MEPI) increased 1.6 percent in the fourth quarter, following a 5.7 percent decrease in the third quarter. The import component was up 2.0 percent while the domestic component increased 0.5 percent.
The 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 1.5 percent relative to the US dollar in the fourth quarter compared with the third quarter of 2017.
Finance, insurance and real estate (+2.3 percent) was the largest contributor to the quarterly increase in the MEPI. All manufacturing (+1.6 percent), transportation and warehousing (+1.7 percent), public administration (+1.6 percent), and mines, quarries and oil wells (+1.3 percent) also contributed to the quarterly price increase.
Computers and computer peripheral equipment (+1.6 percent), passenger cars (+3.4 percent), logging, mining and construction machinery and equipment (+1.1 percent) and other industry specific machinery (+1.9 percent), all contributed to the quarterly price increase.
The total MEPI decreased 2.9 percent in the fourth quarter compared with the same quarter of 2016.
The import component was down 3.6 percent, while the domestic component decreased 0.6 percent. The movement in the import component was influenced by the year-over-year appreciation of the Canadian dollar (+4.9 percent) against the US dollar.