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1504.0 - Methodological News, Dec 2004  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 05/01/2005   
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IMPROVING COHERENCE BETWEEN SEASONALLY ADJUSTED ESTIMATES

The Australian Bureau of Statistics (ABS) publishes seasonally adjusted indicators for many subject matter area (SMA) collections. A lack of coherence in the seasonal adjustment of broadly similar original estimates can be observed when related collections are independently seasonally adjusted, resulting in two different sets of seasonally adjusted movements, which on some occasions are in opposite directions.

It would generally be expected that broadly similar original estimates from different ABS SMA's (inputs) would result in broadly similar seasonally adjusted indicators (outputs). However, discrepancies between related collections' original estimates and between seasonally adjusted methods have resulted in different seasonally adjusted movements. Identifying and addressing the causes of these discrepancies should improve coherence of these seasonally adjusted movements.

The independent seasonal adjustment of similar ABS collections was found to be limited to a total of twenty cases. Nineteen of these cases related to National Accounts time series and their corresponding time series from other SMA's, especially Quarterly Business Indictors Surveys and Construction Surveys.

Of these nineteen cases, the major cause was found to be discrepancies between the original estimates, which, although based on ABS survey output, were sometimes subject to further adjustments due to appropriate data confrontation or to transforming the source SMA's estimates to a "National Accounts" basis.

    All twenty cases also had some discrepancy between their seasonal adjustment methods. This was due to differences in the seasonal adjustment approach (concurrent or forward factor), type (direct or indirect) or prior corrections applied, especially trading day, Easter, structural breaks and outlier corrections.

    In conclusion, it was recognised that discrepancies in the methods of seasonal adjustment between related collections should be addressed to improve coherence. Time Series Analysis section has begun to work closely with National Accounts and other SMA's to improve coherence in recent annual seasonal reanalyses. In the long term, a more systematic approach will be pursued, by linking meta data between related time series to improve their seasonal adjustment coherence.

    For further information, please contact, Tom Outteridge on (02) 6252 6406

    Email: tom.outteridge@abs.gov.au.

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