Gross Fixed Capital Formation

1
Gross Fixed Capital Formation

• 
  Concepts
• Total 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 Assets

• Acquisitions, 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
Others

• Major improvements to non-produced tangible
  assets, including land.
• Costs of transfers of ownership of produced and
  non-produced assets.

5
Gross Fixed Capital FormationBusiness and
Government

• Three main categories
• Residential Construction
• Non-Residential Construction
• Machinery and Equipment

6
Business Residential Construction
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 Survey
• work put in place coefficients

8
Other New Construction

• Cottages, mobile homes and conversions
• Building Permits Survey
• Supplementary costs
• Goods and services Tax
• Provincial Sales Tax
• Land developer fees
• Other supplementary costs
• Data 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 life
• e.g. - replacement of carpets
• - replacement of roof
• - installation of fixed electrical home
  appliances
• Repair work is recorded in personal consumer
  expenditures under services.

10
Alterations and Improvements(Annual Estimates)

• National and provincial annual estimates
• Renovation expenditures undertaken by
• Owner occupants
• Landlords
• Cottage owners
• Renters
• Survey of Household Spending SHS
• Homeowners 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 as
• building 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 Survey
• Multiple Listing Service MLS
• Survey of Household Spending SHS
• Quarterly source
• Multiple Listing Service MLS
• the number of units sold and
• the average sale price.

14
Deflation

• New residential construction
• New House Price Index NHPI excluding land
  (Prices Division)
• Single family dwellings
• Semi-detached dwellings
• Row houses
• Apartment Building Construction Price Index
• Apartments

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 Costs
• Indexed 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 renovations
• Conversions and alterations that extend the life
  of an existing asset
• Transfer costs
• Capitalized costs (architectural, legal and
  engineering fees and interest)

17
Total Non-residential Construction
18
Business Public Administrations

• Two categories
• Building construction
• e.g. hotels, office buildings, railway stations,
  schools and shopping centres
• Engineering construction
• e.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 Estimates
• Quarterly projectors and related indicators
• Quarterly sources of data
• There is no quarterly survey.
• Related indicators are used to measure
  non-residential construction for the current year.

20
Global Approach

• Total 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, AI)
• 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 type
• Quarterly estimates are benchmarked during the
  annual revision cycle
• Annual 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) coefficients
• The 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
  asphalt
• Labour costs (SEPH)
• Railways
• Material costs (e.g. ties, sand, stone, steel,
  etc.)
• Labour costs (SEPH)

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 of
• Hours
• Average weekly earnings
• Number 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,
  railwaysetc.)
• Capital spending by provincial electric utilities
  Public Institutions Division
• Cubic metres drilled in the oil and gas industry
  Industry Accounts Division Monthly GDP
• Department of Natural Resources (general
  exploration expenditures )

26
DeflationBuildings

• Non-Residential Building Construction Price
  Indexes (commercial, industrial and
  institutional) Prices Division
• The 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
DeflationEngineering

• 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 costs
• feasibility studies, tooling, progress payments
• exploration and development costs
• net portion of used assets

29
Business Machinery and Equipment
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 and
• The 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, where
• GO - gross output estimated using shipments
• M - imports from International Trade Division
• X - exports from International Trade
  Division
• Done at a very detailed level (39 groups), such
  as for
• Telecommunication equipment
• Telephone and related equipment including
  facsimile
• Broadcasting and radio communication equipment
• Radar radio navigation equipment
• ( Re. Supply/disposition models sent to the NBS
  on March 2007 )

32
Sources of Data(Quarterly)

• Industrial machinery
• Machine tools
• Conveyors, elevators hoisting machinery
• Packaging and bottling machinery
• Construction mining machinery
• Logging, pulp paper industry machinery
• Power generation marine prop., non-electric
• Electrical generators motors

33
Sources of Data(Quarterly)

• Other transportation equipment
• Aircraft
• Commercial trailers semi-trailers
• Truck bus bodies cargo containers
• Locomotive, railway urban trans. rolling stock
• Ships, boats parts, excl. pleasure
• And 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 Sales
• Government and business shares based on data from
  Motor Vehicles Manufacturers Association.

35
Software Investment

• Own account software
• Pre-packaged software
• Custom-design software
• Own-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
Deflation

• Machinery 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
Deflation

• The 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.

38
Total Investment on Plant and Equipment, 2005