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Feature Article - Easter Holiday Effects in Retail Turnover
METHOD AND INTERPRETATION OF CHARTS
Because of the limited amount of data available for analysis from occasions when Easter has fallen near the end of March, or in early April, sophisticated techniques to investigate and quantify a potential Easter holiday proximity effect are not applicable. Instead, this article presents some graphical evidence to enable readers to make their own assessment of any systematic proximity effect on retail turnover data associated with
Easter falling late in March, or early in April.
The original retail turnover data series is decomposed by the seasonal adjustment process into three components, namely the seasonal factors, the trend and the residual/irregulars. Neither the seasonal factors or the trend would reflect the Easter holiday effect. Hence, any Easter holiday effect would remain in the residual/irregular component of the series. Therefore, if there is a systematic Easter holiday effect operating in the series, it will show up as a pattern in the residuals about the trend estimates of the seasonally adjusted series.
In this article the residuals have been derived by dividing the seasonally adjusted series by the trend. This provides a (multiplicative) measure of any residual/irregular effect in the seasonally adjusted series. This approach is consistent with the conventional use of multiplicative seasonal adjustment factors for these series.
Provided sufficient observations are available, examining charts of these residuals could enable a visual assessment of whether a systematic Easter holiday effect is present. Available data has been plotted for all Easters that have occurred between March 28 and April 7. The bottom axis of the graph shows the dates on which the Easter holiday began (Good Friday), and each point on the graph represents the residual for March or April for a particular year. If the residuals are scattered in a random fashion about the benchmark neutral line of unity, the interpretation would be that there is no systematic Easter holiday effect. This is because after removing the trend from the seasonally adjusted series only irregularity would then remain, oscillating randomly about its expected value of unity, as it should. However, if the residuals for a particular month are consistently above or below the benchmark neutral line, then that would provide evidence of a systematic Easter holiday effect. It would also allow assessment as to whether the effect changes over time as the starting date of Easter moves closer to the end of March/start of April.
EASTER HOLIDAY PROXIMITY EFFECTS IN RETAIL TURNOVER
The chart below illustrates graphically how few observations of Easter starting in the period March 28 to April 7 there were over the last 37 years. Only four observations have occurred in this decade, namely 28 March 1997, 29 March 1991, 1 April 1994 and 5 April 1996. As well as a shortage of data points, there is also the issue that any effect may have been changing over recent years because of, among other things, retail purchasing patterns changing with deregulation of trading activity. Therefore, observations earlier than the present decade may not be pertinent to 1999 Easter’s activity.
Graph 1. TOTAL RETAIL TURNOVER, AUSTRALIA
This chart shows Total Retail Turnover in Australia over the available data span April 1962 to January 1999. Appendix 2 presents 16 more charts, for States/Territories, and major industries to enable readers to make their own assessment of whether April Easters that are close to the end of March have a systematic effect on retail turnover activity in March and April.
It would seem from the charts that in the past when Easter starts on or after 5 April, there is no evidence of a systematic Easter holiday proximity effect; the residuals for March and April are randomly distributed about the neutral benchmark line. Similarly, when the Easter holiday has begun on or before 28 March, the residuals are also randomly distributed about the neutral line. Examining the historical data for Easters which fell earlier into March, or later into April (not shown on the graph above) confirms that there is no simple ‘moving holiday Easter effect’.
However, when Easter has started on 1 April the ratios for March are consistently above the neutral benchmark line, and those for April are below the neutral line, although not always by the same amount. This also appears to be the case in Total Retail Turnover for Australia when Easter started on 4 April, but not to the same extent. In this case the two observations are quite dated at 1969 and 1980. This seems to suggest that there may be an Easter holiday proximity effect. However, conclusions based on so few observations are tenuous.
When Easter starts in late March, there appears to be a slight Easter holiday proximity effect in 1972 and 1991.
If there is an Easter holiday proximity effect, it is likely that the seasonally adjusted Retail Turnover estimates will be higher than would otherwise be expected in March 1999, and lower than would otherwise be expected in April 1999. Given the dated nature of the evidence for 4 April, little information is available on the rate of decay of the effect as the date on which Good Friday falls moves into April. This makes it very difficult to predict the magnitude of any Easter holiday proximity effect. From visual inspection of the charts, it appears that if they were used to approximate the size of an effect, it is unlikely to be more than of the order of 1 to 1.5%, i.e. the figure for March 1999 would be approximately 1 to 1.5% higher than expected based on normal seasonal factors, with the seasonally adjusted figure for April 1999 a similar percentage lower than expected.
Research to empirically quantify the Easter holiday proximity effect is continuing. This research is likely to be relevant for 2002 when Good Friday falls on March 29. Analysts wishing to discount any Easter holiday proximity effect or other irregular behaviours in the seasonally adjusted series are advised to analyse the trend estimates.
FOR FURTHER INFORMATION
For further information regarding this article contact the Supervisor, Time Series Analysis section, ABS on 02 6252 6345.
APPENDIX 1. START DATES FOR THE EASTER HOLIDAY, 1962 TO 2010
APPENDIX 2. CHARTS SHOWING MARCH AND APRIL RESIDUALS FOR RETAIL TURNOVER
States and Territories
Graph A1. NEW SOUTH WALES
Graph A2. VICTORIA
Graph A3. QUEENSLAND
Graph A4. SOUTH AUSTRALIA
Graph A5. WESTERN AUSTRALIA
Graph A6. TASMANIA
Graph A7. NORTHERN TERRITORY
Graph A8. AUSTRALIAN CAPITAL TERRITORY
Graph A9. FOOD RETAILING AUSTRALIA
Graph A10. DEPARTMENT STORES, AUSTRALIA
Graph A11. CLOTHING AND SOFT GOOD RETAILING, AUSTRALIA
Graph A12. HOUSEHOLD GOOD RETAILING, AUSTRALIA
Graph A13. RECREATIONAL GOOD RETAILING, AUSTRALIA
Graph A14. OTHER RETAILING, AUSTRALIA
Graph A15. HOSPITALITY AND SERVICES, AUSTRALIA
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