Post-Brexit Out-of-Sample Forecasted Electricity Consumption

Take England+Wales log daily electricity consumption, detrend using Christiano-Fitzgerald band pass filter, and then regress on seasonal (calendar) terms, and temperature/wind/rain factors (Kirchmaier and de Guana de Santiago, 2016, h/t Simon Kennedy at Bloomberg), through April 2016. Then forecast out of sample; the residual looks like this:

kirchmaier_etal_fig3

Figure 3 from Kirchmaier and de Guana de Santiago, (2016).

Electricity consumption is way under what would be expected from historical correlations, suggesting a decline in economic — particularly industrial — activity.

While monthly estimates of November GDP are up 1.1% relative to June, industrial output is down by 1.2%, according to NIESR (Dec. 7).

It is always useful to keep in mind that economic statistics are sometimes revised by large amounts.

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