Milford chronicle., 1961-04-21
From The April
Business Review

AidnuIdCIuflnS. A new INDICATOR OF
Economic Activity in the Third
District.
People and power, directing and
energizing the processes of indus
| try, produce goods. If we knew
how many of these inputs of hui
man and nonhuman energy went
into the manufacturing secto of the
economy during a period of time,
we could guess roughly how much
that economy produced. If we knew
further, how many average units
of output result from each possible
combination of man-hour and pow
er inputs, we could estimate total
production quite closely. In this
article, we introduce new statisti-
cal series which constitute a step
| toward these goals.
On a national scale. substantial
| resources of statistical talent and
economic knowledge constantly are
brought to bear on the problem
of estimating production The re-
suit is the Federal Reserve month
ly index of physical volume of in
dustrial production. But in particu-
lar regions of the country, the con-
| siderable resources required for
| the painstaking task of estimating
| industrial output are scarce. Con-
sequently, approximate measures
such as total manufacturing en-
ployment or, better, total man
hours employed in manufacturing
have been the best available for
most regions, including the Third
District.
But employment or man-hours
grow more slowly than industrial
output, because machines are con-
| tinually replacing people in pro-
duction processes. The input which
energies this new machinery typi-
cally is electric power Electric
power consumption therefore is an
important indicator of industrial
activity. For some time this Bank
has been collecting data directly
from utility companies and from
manufacturing concerns which gen.
crate power on site, with the aim
| OF developing estimates of manu-
facturers' electric power consump-
tion in the Third Rederal Reserve
District. We now have several use
full sets of comparable data for the
period from 1854 TO date The pur-
pose of this notice is to describe
these series briefly and to announ-
zee their availability.
Releases
A monthly release is now avail
able TO anyone requesting it from
the Department of Research of this
Bank. 1t shows, in the form of
indexes based on 1857, the electric
power consumption in the 90 major
divisions of manufacturing activity
in the Third Federal Reserve Dis
trict, in nondurable and durable
goods industries, and in all manu-
featuring. Both seasonally adjust
ed and unadjusted indexes are Civ
en- for the latest two months and
for the latest comparable month of
the previous year.
On request. historical data also
are available from January 1854 to
date, showing electric power con-
sumption in the Third District in
all manufacturing, durable. and
nondurable goods classifications.
Data and c0yerage
The data from which the indexes
of electric power consumption are
computed come from two sources:
utility companies and manufacture
ing firms which produce electric
power for their own use. Sales to
manufacturer by utilities account
1 frxas, soIx srfE
total consumption in the Third Dis
trict, the remainder is self-gener-
ated. This proportion varies wide
ly among industries, however. Self
generated power is most important
in the primary metals, paper, stone
clay, and glass, petroleum refin-
! ing. food, textile. and chemical in
dustries. Only four of the 20 manu-
featuring industries buy all thier
power from utility companies.
The utility companies reporting
account for 80 per cent of all cleo
| tric power sales to manufacturing
concerns in the Third District. Com
panies reporting e f-generated
/ power account for about 20 per
cent of all manufacturers consum-
ption of such power in the Third
District. These companies are heav-
/ lily concentrated in the industrial
classifications-enumerated above
in which self-generated power is
most important
The series are not adjusted, ex-
cept for seasonal adjustment. They
represent, in each Industrial class
| ification, the total of kilowatt-hours
consumed each month by firsm re-
porting and by firms TO which
utility companies reporting sold
| power that month, converted to an
index based on 1867. The indexes
for durable. nondurable, and all
manufacturing are computed from
| simple totals of kilowatt-hours for
all the relevant industry groups.
The all-manufacturing serie S
each month represents approximate
/ ely S5 per cent of total electric
power consumption by manufactur-
Ling concerns in the Third District.
Uses
Electric power consumption stat
istics will be used to improve the
accuracy of national measures of
physical volume of output, particu-
larly for industries where physical
product data are not available. Pro-
duction-worker man-hour statistics
formerly were the main basis for
compiling current production in
those industries; now the electric
power data will provide an indep-
endent check.
Electric power consumption by