(cont.)Can statistics tell the truth? --some tips and techniques for interpreting statistics--

3) seasonal adjustment analysis:
    Seasonal adjustment is the technique for getting rid of seasonal factors. Because this function is not equipped with ms-excel, free software – X-12-arima – is commonly used. As seasonal adjustment eliminates basic season variation, for example, the production output of ice cream increases in summer (decreases in winter), developments without seasonal trends are clearer. In the case of figure 5, seasonal adjustment processing enables us to figure out the transition of Japan’s GDP.

fig.5 : Comparison of seasonal adjustment series with original series
 

    Be careful about results of seasonal adjustments. The figure 6 shows the difference between officially released seasonal adjustments series and unofficial (original) seasonal adjustment series. The latter series is derived from x-12-arima standard code. As you see, both results are almost the same but subtly different.

fig.6 : Comparison of official seasonal adjustments with unofficial one
 

    In these three articles, I introduced some major tips and techniques for interpreting economic statistics. It may be difficult at first (to tell the truth, I think so too!), but the more you face statistics the better you understand it.