Analysis - Fourth Quarter 2011
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Industrial Product Price Index, Selected Construction MaterialsSeries
(See table 2)
In the fourth quarter of 2011, the four largest quarterly price changes in the main commodities used in construction were three increases in the structural and "other" groups, and a decrease in the structural group. Diesel fuel led the pack with a 6.9% increase, followed by heavy trucks, domestic (+3.0%) and structural shapes, steel including fabricated (+2.9%); particleboard and waferboard saw the largest decline (-7.4%).
Following a slight decrease (-1.7%) in the last quarter, diesel fuel prices rebounded 6.9% in the fourth quarter of 2011. These prices had increased 13.5% and 4.7%, respectively, in the first and second quarters of the year.
Prices for heavy trucks, domestic rose 3.0% in the fourth quarter of 2011, the largest increase since 2008.
For a second consecutive quarter, prices for structural shapes, steel including fabricated (+2.9%) were up. In the previous quarter, it had risen 1.4%.
Particleboard and waferboard (-7.4%) posted the largest drop in prices in the fourth quarter of 2011. This is the third straight quarterly decline for this commodity group.
Compared with the fourth quarter of 2010, the four biggest price changes in the main commodities used in construction include a decrease in particleboard and waferboard (-10.2%) and three increases: diesel fuel (+24.9%), structural shapes, steel including fabricated (+13.8%), and carpets in rolls (+11.3%).
Posting its eighth consecutive year-over-year increase, diesel fuel prices continued to climb, with a 24.9% rise in the fourth quarter of 2011. Year over year, prices for diesel fuel grew steadily in 2011, with increases of 25.7%, 33.4% and 32.9% in the first three quarters of the year, respectively.
Compared to the same quarter of the previous year, prices for structural shapes, steel including fabricated, rose 13.8%. This was the fifth straight quarterly increase. In the first three quarters of 2011, prices increased 11.4%, 4.5% and 10.0%, respectively.
Year over year, prices for carpets in rolls rose 11.3% in the fourth quarter of 2011 for an eighth consecutive quarter increase.
Particleboard and waferboard prices fell 10.2%, for a fifth straight quarter year-over-year. Prices had declined 3.4%, 12.9% and 6.5%, respectively, in the first three quarters of 2011.
Construction Union Wage Rates Index
(See table 4)
In the fourth quarter of 2011, the Canada Total Construction Union Wage Rates Index (including supplements) increased by 0.4% compared with the previous quarter. It was 1.7% higher compared with the fourth quarter of 2010.
On a regional basis, only the index for British Columbia registered a quarterly change (+2.8%). All other regions remained unchanged from the previous quarter.
New Housing Price Index
(See table 5)
The New Housing Price Index (2007=100) increased 0.6% in the fourth quarter of 2011, up from the previous quarterly increase of 0.5%. The Atlantic Region (+0.1%), Québec (+0.5%) as well as Ontario (+1.1%) and the Prairie Region (+0.4%) all posted increases, while British Columbia (-0.5%) recorded its second consecutive quarterly decrease.
In the Atlantic Region, the primary reasons for the increase were higher material, labour and land development costs. The metropolitan areas of Halifax (+0.4%) and Charlottetown (+0.2%) posted increases from last quarter. Saint John, Fredericton and Moncton as well as St. John's were unchanged from last quarter.
In the Quebec Region, both Québec (+0.8%) and Montréal (+0.4%) recorded price increases in the fourth quarter, primarily as a result of good market conditions and increased material and labour costs.
Competitive market conditions as well as increased land development costs and higher land values contributed to the increases in Ontario in the fourth quarter. Increases were observed in the metropolitan regions of Toronto and Oshawa (+1.5%), Windsor (+1.4%), Kitchener-Cambridge-Waterloo and Ottawa-Gatineau (both +0.4%), as well as Hamilton, London and Greater Sudbury and Thunder Bay (all three at +0.1%).
Higher material and labour costs contributed to the increases in the Prairie Region this quarter. Winnipeg (+1.2%) Saskatoon (+0.7%), Regina (+0.6%) as well as Edmonton (+0.4%), and Calgary (+0.3%) all experienced increases compared to the last quarter.
In British Columbia, Victoria (-0.8%) posted its 6th consecutive quarterly decrease as builders lowered their prices to stimulate sales. Vancouver (-0.5%) also posted a decrease in the 4th quarter of 2011 as builders reported lower negotiated selling prices.
Apartment Building Construction Price Index
(See table 6)
The composite price index for apartment building construction increased 0.4% in the fourth quarter compared with the previous quarter. The quarterly change was mainly a result of continued strength in this sector of the residential construction market.
All of the seven census metropolitan areas (CMAs) surveyed reported quarterly increases varying from 0.1% to 0.9%. Edmonton and Calgary (both +0.9%) posted the largest increases.
Year over year, the composite price index for apartment building construction was up 3.7%. Of the CMAs surveyed, Ottawa–Gatineau, Ontario part (+4.4%) recorded the largest year-over-year increase, while Halifax (+3.2%) recorded the smallest gain.
Non-residential Building Construction Price Index
(See table 7)
The composite price index for non-residential building construction increased 0.6% in the fourth quarter compared with the previous quarter. This quarterly change was mainly a result of continued strength in the non-residential building construction market.
All of the seven census metropolitan areas (CMAs) surveyed reported quarterly increases varying from 0.3% to 0.8%. Calgary and Edmonton (both +0.8%) and Toronto (+0.7%) recorded the largest gains.
Year over year, the composite price index for non-residential building construction was up 4.1%. Of the CMAs surveyed, Ottawa–Gatineau, Ontario part (+5.4%) and Toronto (+4.7%) recorded the largest year-over-year increases, while Halifax (+2.8%) recorded the smallest gain.
Machinery and Equipment Price Index
(See table 8)
The Machinery and Equipment Price Index (MEPI) rose 3.3% in the fourth quarter compared with the previous quarter. The import component was up 5.2% over this period, while the domestic component increased 0.2%.
All industries posted increases in prices of machinery and equipment purchased in the fourth quarter. The largest contributor to the total MEPI quarterly increase was manufacturing (+3.3%), led by transportation equipment manufacturing (+3.1%) and primary metal and fabricated metal product manufacturing (+3.2%) industries. The second largest contributor to the quarterly increase of the total MEPI was finance, insurance and real estate (+3.7%).
On a commodity basis, almost all commodities posted price increases in the fourth quarter. Among these, trucks, road tractors and chassis (+6.4%) and other industry specific machinery (+3.9%) contributed the most to the quarterly increase of the total MEPI.
The Canadian dollar depreciated 4.2% against the US dollar in the fourth quarter compared with the previous quarter. Variations in exchange rates can have a strong influence on the MEPI given the high weight that imported machinery and equipment has on the index.
Compared with the fourth quarter of 2010, the total MEPI increased 2.4%, with the import component rising 3.1% and the domestic component up 1.1%. The movement in the import component was partly influenced by the year-over-year change in the Canadian dollar (-1.0%) against the US dollar.
Electric Utility Construction Price Index
(See table 9)
Annual 2010 (revised) and first half 2011 (preliminary)
Construction costs for electric utility distribution systems series increased by 2.9% during the first half of 2011 compared with the 2010 annual index. Higher costs for labour (+6.2%) and construction indirects (+2.9%), which includes engineering, administration and overheads, were the major contributors to the advance in the index.
In the first half of 2011, construction costs for the transmission line system series rose 2.0%, while the transmission line component increased 3.6%, largely as a result of installation labour (+6.2%). The substation component increased by 1.0% in the first half of 2011, led by a 2.7% increase in the construction indirects component.
Compared with 2009 final data, the revised 2010 data showed increases for the distribution systems series (+2.4%) and the transmission line system series (+0.7%). The transmission line component increased by 1.7% and the substation component rose slightly (+0.1%).
Consulting Engineering Services Price Index
(See table 10)
2010 (preliminary)
The Canada total Consulting Engineering Services Price Index increased 4.1% in 2010 compared with 2009.
Prices rose for all specializations, except environmental services, ranging from gains of 1.5% for other engineering services, to 8.9% for buildings.
Infrastructure Construction Price Index
An analytical price index series measuring annual changes in the cost of municipal infrastructure construction funded by development charges has been developed by Statistics Canada on behalf of the City of Ottawa. The annual index for 2011 was 145.5 (2001 =100), an increase of 3.2% over the revised annual index of 141.0 for 2010. The indexes for 2009, 2008, 2007, 2006, 2005, 2004, 2003 and 2002 were 136.7, 133.3, 125.0, 120.0, 113.1, 107.8, 104.8 and 102.3 respectively.
Note: In 2009, all indexes were revised back to 2001. Calendar year averages of each input index are now used in the calculations. Also, revisions were made in the selection of a small number of inputs in order to improve the quality of the index.
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