Tuesday, December 15, 2009
I wanted to take a look at the relationship between employment and oil demand. I was rather hoping to use this as a basis for forecasting the recovery in oil demand, but actually the correlation is too poor for that.
Here's the raw data. The employment data is non-farm payroll employment from the BLS establishment survey. The oil demand data is the EIA weekly US product supplied series discussed in this post.
To make is easier to see, I re-expressed both series as a fraction of their peak value. (The oil demand is probably not going to go above 1 again, but hopefully the employment will!)
As you can see the oil demand peaked earlier (which makes sense given the price shock in 2005-2008), but also has fallen proportionately far further than the employment series. This I need to understand better - I will take a look at the various subcomponents of oil demand shortly.