Presentation on theme: "Gross Fixed Capital Formation"— Presentation transcript:
1 Gross Fixed Capital Formation ConceptsTotal value of acquisitions, less disposals, of fixed assets during the accounting period, plus certain additions to the value of non-produced assets owing to the productive activity of institutional units.Fixed assets are tangible or intangible assets which are produced as outputs from production processes and which are themselves used repeatedly or continuously in other production processes for more than one year.
2 Tangible Fixed AssetsAcquisitions, less disposals, of new and existing tangible fixed assets, sub-divided by type of asset into:Dwellings;Other buildings and structures;Machinery and equipment;Cultivated assets – trees and livestock - that are used repeatedly or continuously to obtain products such as fruit, rubber, milk, etc.
3 Intangible Fixed Assets Aquisitions, less disposals of new or existing intangible fixed assets, sub-divided by type of asset into:Mineral exploration;Software;Entertainment, literary or artistic originals;Other intangible fixed assets.
4 OthersMajor improvements to non-produced tangible assets, including land.Costs of transfers of ownership of produced and non-produced assets.
5 Gross Fixed Capital Formation Business and Government Three main categories:Residential ConstructionNon-Residential ConstructionMachinery and Equipment
6 Business Residential Construction Millions of dollars2003200420052006New Construction36724421364392747652Alterations and Improvements24209271003027033631Transfer Costs11781136821559417103Total72714829188979198386
7 New Residential Construction Singles, doubles, rows and apartments – (Work-put-in-place)housing starts – Central Mortgage and Housing Corporation ( CMHC )average value of building permits – Building Permits Surveywork put in place coefficients
8 Other New Construction Cottages, mobile homes and conversionsBuilding Permits SurveySupplementary costsGoods and services TaxProvincial Sales TaxLand developer feesOther supplementary costsData published on a monthly basis by Investment and Capital Stock Division ( ICSD)
9 Alterations and Improvements Included are all works that improve the quality of the dwelling and extend its service lifee.g. - replacement of carpets- replacement of roof- installation of fixed electrical home appliancesRepair work is recorded in personal consumer expenditures under services.
10 Alterations and Improvements (Annual Estimates) National and provincial annual estimatesRenovation expenditures undertaken by:Owner – occupantsLandlordsCottage ownersRentersSurvey of Household Spending –SHSHomeowners Repairs and Renovations Survey - HRRS
11 FAMEX /SHS – Family Expenditure Survey or Survey of Household Spending HRRS – Homeowners Repair and Renovations Survey (discontinued in 2002)IEAD – SNA estimate
12 Alterations and Improvements (Quarterly Sources) Building permits for renovations (source: ICSD )Sales of building materials such asbuilding supplies,metal products,lumber and millwork.( source: Wholesale Trade Survey )And information for home furniture stores, home centres and hardware stores and other building material and garden equipment dealers. (source: Retail Trade Survey )
13 Ownership Transfer Costs Annual sources of data:Real Estate Agents and Brokers SurveyMultiple Listing Service – MLSSurvey of Household Spending – SHSQuarterly sourcethe number of units sold andthe average sale price.
14 Deflation New residential construction New House Price Index – NHPI excluding land (Prices Division)Single family dwellingsSemi-detached dwellingsRow housesApartment Building Construction Price IndexApartments
15 Deflation Alterations and Improvements: Renovations Price Index (estimated in IEAD)Cost of Labour ( 60% ) ( Survey of Employment, Payrolls and Hours)Cost of Materials ( 40% ) ( Materials by type such as lumber, pipes, etc. )Transfer CostsIndexed average selling price of existing homes sold from Multiple Listing Services (MLS)
16 Non-Residential Construction New non-residential construction (work put in place)Additions and major renovationsConversions and alterations that extend the life of an existing assetTransfer costsCapitalized costs (architectural, legal and engineering fees and interest)
17 Total Non-residential Construction Millions of Dollars2003200420052006Buildings27237298673238835914Engineering47029534776517578056Highways73037693928310650Railways90597011721338Other engineering38821448145472066068Total742668334497563113970
18 Business & Public Administrations Two categoriesBuilding constructione.g. hotels, office buildings, railway stations, schools and shopping centresEngineering constructione.g. bridges, roads, highways, waterworks, sewage systems, airports, transmission lines, oil well drilling, mine development, railway tracks, etc.
19 Sources of Data Annual sources of data Input/Output tables Capital Expenditure Survey (CES), Actual, Preliminary and Intentions EstimatesQuarterly projectors and related indicatorsQuarterly sources of dataThere is no quarterly survey.Related indicators are used to measure non-residential construction for the current year.
20 Global ApproachTotal Construction Activity is obtained by combining data on:Material costs (shipments - exports + imports + ∆ inventories)+ Labour costs (employment, hours and average earnings)+ Overhead costs and profits= Total value of construction activity- Estimates of residential construction (New Construction, A&I)+ Value added in oil and gas drilling= Value of spending on non-residential construction
21 Non Residential Construction Resulting estimates are compared with annual estimates from the Capital Expenditure Survey and the survey by asset typeQuarterly estimates are benchmarked during the annual revision cycleAnnual estimates reflect the most recent data from Input-Output tables
22 Detailed approaches I. Buildings: Institutional, industrial and commercial non-residential construction (ICSD) based on monthly building permit values and monthly work put in place (WPIP) coefficientsThe monthly Building Permits Survey of Canadian municipalities collects data on the value of construction intentions for buildings in the non-residential sector and the number of dwellings authorized and value of construction projects in the residential sector.The WPIP coefficients measure, by quarter of start, by province and by type of building, the volume of work normally executed in each construction period.
23 Detailed Approaches II. Engineering: Highways: Material costs based on asphalt sales in cubic metres * Industry Product Price Index (IPPI) for asphaltLabour costs (SEPH)Railways:Material costs (e.g. ties, sand, stone, steel, etc.)
24 Detailed 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 ofHoursAverage weekly earningsNumber of employees.Information based on Labour Force Survey ( LFS ) and Survey of Employment, Payrolls and Hours ( SEPH )
25 Non Residential Construction 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 DivisionCubic metres drilled in the oil and gas industry – Industry Accounts Division – Monthly GDPDepartment of Natural Resources (general exploration expenditures )
26 Deflation BuildingsNon-Residential Building Construction Price Indexes (commercial, industrial and institutional) – Prices DivisionThe Non-residential Building Construction Price Index (NRBCPI) is a quarterly series measuring the changes in contractors' selling prices of non-residential building construction (i.e. commercial, industrial and institutional)
27 Deflation Engineering In the absence of output price indexes – Input price indexes are constructed in IEAD:Material costs:IPPI for prefabricated metal building and structure, line pipe, other insulated wires and cables, concrete basic products, sand, stone, ready-mix concrete, etc.Labour costs:Average weekly earnings (SEPH)Overhead costs:Average weekly earnings indexes and consumer price indexes
28 Machinery and Equipment Spending on durable and tangible goods that have a productive life of one year or more (whether owned or leased) including:purchase, construction and installation costsfeasibility studies, tooling, progress paymentsexploration and development costsnet portion of used assets
29 Business Machinery and Equipment 2003200420052006Furniture4046455748825348Agricultural Machinery2972293831082644Industrial Machinery20357216062397425128Computers82239315963210072Software10806110001136412053Automobiles6465621663536620Trucks11337121101314013679Other transportation5089533867806532Telecommunication6189597957285926Other5347537656485797Total80831844359060993801
30 Sources of Data (Annual) Benchmark data are from the final demand matrix of the Input-Output tables (IOT).Current estimates are based on the Capital Expenditures Survey Actual, Preliminary and Intentions of Investment and Capital Stock Division andThe sum of the quarterly estimates coming from a Supply Disposition approach.
31 Sources of Data (Quarterly) Supply / Disposition model:GFME = GO + M – X + change in inventories, whereGO - gross output estimated using shipmentsM - imports from International Trade DivisionX - exports from International Trade DivisionDone at a very detailed level (39 groups), such as forTelecommunication equipmentTelephone and related equipment including facsimileBroadcasting and radio communication equipmentRadar & radio navigation equipment( Re. Supply/disposition models sent to the NBS on March 2007 )
32 Sources of Data (Quarterly) Industrial machineryMachine toolsConveyors, elevators & hoisting machineryPackaging and bottling machineryConstruction & mining machineryLogging, pulp & paper industry machineryPower generation & marine prop., non-electricElectrical generators & motors
33 Sources of Data (Quarterly) Other transportation equipmentAircraftCommercial trailers & semi-trailersTruck & bus bodies & cargo containersLocomotive, railway & urban trans. rolling stockShips, boats & parts, excl. pleasureAnd other groups
34 Investment in Cars and Trucks A more direct approach is used to estimate investment in cars and trucks:Total sales by type from Survey of New Motor Vehicle SalesGovernment and business shares based on data from Motor Vehicles Manufacturers Association.
35 Software Investment Own account software Pre-packaged software Custom-design softwareOwn-account software ( software developed by in-house employees to meet specific organization needs ) is based on the labour costs of computer programmers and system analysts and other costs (non-salary) of in-house software development.Investment in pre-packaged and custom-design software is estimated residually (domestic production, plus imports, plus margins, less exports, less personal expenditure).
36 DeflationMachinery and equipment price indexes (MEPIs) are used for all commodities except computers and software. The MEPI tracks price movements on a domestic and imported basis (producer price indexes published by the U.S. Bureau of Labor Statistics are used for the import component).The Machinery and Equipment Price Index (MEPI) provides quarterly estimates of price changes for machinery and equipment purchases, relative to annual gross additions to capital by Canadian Industry of purchase.
37 DeflationThe deflator for computers is a weighted average of import and export computer price indexes.Own-account software is deflated using a fixed weighted average of hourly earnings of programmers and systems analysts and an index of costs of non-labour inputs.The Commercial Software Price Index from Prices Division is used to deflate pre-packaged software.Custom-design software is deflated using a weighted average of the pre-packaged and own-account price indexes.