Between 1998 and 2002 the overall manufacturing sector and its major energy-intensive subsectors showed varying amounts and directions of change with regard to major economic indicators.

Gross Domestic Product

Table 1. Real Value Added by Industry between 1998 and 2002 (percent increase in chained constant dollars)
311 -- Food	-6.2
322 -- Paper	-9.5
324 -- Petroleum and Coal	+21.1
325 -- Chemicals	+10.7
331 -- Primary Metals	-6.3
Manufacturing Total	+6.0
Notes: Nominal Value Added comes from the 1998 values in the 2001 Annual Survey of Manufacturers (ASM). The 2002 nominal values come from the 2004 ASM (released 12/14/2005). The 3-digit level NAICS value added numbers are deflated using BEA chain-type indices for value added (released 12/15/2005).    Sources: U. S. Census Bureau, Annual Survey of Manufacturers. 2001 and 2004; U. S. Bureau of Economic Analysis, Gross Domestic Product-by-Industry Accounts, Chain-Type Price Indexes for Value Added by Industry.

Gross Domestic Product (GDP) is a measure that can be used as an indicator of the economic health of a group of related businesses. It is the sum of the value added of the members of the group. While GDP alone cannot tell the whole story of the economic prosperity for a group, it is a commonly used indicator. Overall, there was a 6 percent increase in total value added in the manufacturing sector from 1998 to 2002 (see Table 1). However, among the subsectors that consumed the most energy¹, listed in Table 1, only the chemicals and petroleum and coal groups showed an increase in real value added. The chemicals and petroleum and coal industries, along with other groups that are not among the largest users of energy, drove up real value added to the 6 percent growth between 1998 and 2002.

Value of Shipments

Table 2. Real Value of Shipments by industry between 1998 and 2002 (percent increase in constant dollars)
311 -- Food	+ 4.1
322 -- Paper	- 7.0
324 -- Petroleum and Coal	+ 6.4
325 -- Chemicals	+ 2.8
331 -- Primary Metals	- 12.2
Manufacturing Total	0.0
Notes: See sheets "A" (nominal value of shipments) and "C" (price deflators) in the Industry Shipments by NAICS worksheet on the Industry Economics Accounts page of the Bureau of Economic Analysis site. Percent change in real value of shipments is calculated by first computing the constant dollar value of shipments for each manufacturing sub-industry and then aggregating into 3-digit NAICS groups.    Source: U. S. Bureau of Economic Analysis, Gross Domestic Product-by-Industry Accounts, GDPbyInd_SHIP_NAICS. Released 12/15/05.

Output measures based on value of shipments have been shown to be the most useful indicator when comparing manufacturing energy consumption from one year to another². Among the manufacturing industries that have traditionally used the most energy, it has been found that the change in energy consumed from one period to another is positively correlated with the change in real value of shipments between the two periods. If the real value of shipments increases by some percentage between years, it is expected that energy consumption increases by approximately that percentage. A discrepancy indicates that there may have been a change in energy intensity in the industry. One common measure of energy intensity is consumption per dollar value of shipments.

Overall, as can be seen in Table 2, the real value of shipments was flat from 1998 to 2002 for the manufacturing sector. Among manufacturing industry groups that traditionally consume the most energy there were mixed results. Petroleum and coal, food, and chemicals had small increases and paper had a small percentage decrease in real value of shipments. The primary metals industry, however, had a more significant percentage decrease in real value of shipments.

Capacity Utilization

Figure 1 contains the percent of production capacity utilized³ in the manufacturing industries which traditionally consume the most energy as well as the sector as a whole for 1998 and 2002. With the exception of the petroleum and coal group, all of the highlighted industries in 2002 operated under the percent capacity levels of 1998. Primary metals was down nearly 10 percent. This, along with the decline in real value of shipments, suggests that the primary metals industry struggled between 1998 and 2002.

Endnotes

¹ In terms of first use of energy sources (energy used for all purposes), the subsectors in Table 1 accounted for 83 percent of the total Btu's used in the manufacturing sector in 2002.

² See "Measures of Output" section of Manufacturing Energy Consumption Survey Methodology: Survey Design, Implementation, and Estimates, 1994. Publication DOE/EIA-0552 discusses how value of shipments mirrors physical output more closely than value added when value added is variable relative to value of shipments for an industry between comparison years.

³ Capacity Utilization is the ratio of a production output index to a production capacity index and is released currently on a monthly basis by the Federal Reserve Board.

Contact

William Gifford
william.gifford@eia.doe.gov
Mathematical Statistician
Phone: (202) 586-5931
Fax: (202) 586-0018

Robert Adler
robert.adler@eia.doe.gov
MECS Survey Manager
Phone: (202) 586-1134
Fax: (202) 586-0018