Chartbook: U.S. diesel and electricity use
Because manufacturing output is closely correlated with consumption of distillate fuel oils and industrial electricity use, the downturn is filtering through into significant reductions in energy consumption. Based on the most recent data available, the volume of distillates supplied, a proxy for consumption, fell in six of seven months between August 2022 and February 2023 compared with the same months a year earlier. The volume of distillates supplied was down by an average of almost 5% between December 2022 and February 2023 (16th percentile for all overlapping three-month periods since 1980). Electricity sales to industrial consumers also fell in six of seven months between July 2022 and January 2023 compared with a year earlier, again using the most recent data available. Between November and January, industrial electricity sales were down by an average of 3% compared with a year earlier (12th percentile for all three-month periods since 1980). The decline in energy use confirms the industrial side of the economy is in the middle of a broad-based and sustained downturn. The downturn is set to last through the middle of 2023 at least, as interest rates rise, corporate layoffs continue, and businesses and households become more cautious about spending.
Related columns: - Hard-ish landing has already arrived for U.S. manufacturers (April 4, 2023) - U.S. diesel consumption falls as economy slows (March 1, 2023)
John Kemp is a Reuters market analyst. The views expressed are his own (Editing by Paul Simao)
