The LPI uses a concurrent seasonal adjustment methodology to derive the adjustment factors. This method uses the original time series available at each reference period to estimate seasonal factors for the current and previous quarters. Concurrent seasonal adjustment is technically superior to the more traditional method of reanalysing seasonal patterns once a year because it uses all available data to fine tune the estimates of the seasonal component each quarter.
Seasonally adjusted estimates are derived by estimating and removing systematic calendar related effects from the original series. In most economic data these calendar related effects are a combination of seasonal influences e.g. the weather, social traditions or administrative practices plus other kinds of calendar related variation, such as trading days, Easter or the proximity of significant days (e.g. Christmas).
Institutional effects largely drive the seasonality of the LPI. Important factors are the timing of effect of Australian workplace agreements and certified agreements, the length of these agreements, and the timing of significant wage hearings that impact on rates of pay. A significant institutional change in wage setting arrangements can affect the relative level (or trend) and seasonality of the index.
There is some indication of change in the size and timing of wage increases being reported in the Labour Price Index Survey. This may result in the seasonally adjusted estimates being revised more than is usual as the series is updated in future quarters. The trend series has been suspended from the September quarter 2006 onwards.
For more details, please refer to the Explanatory Notes of the publication.