The Importance Of Seasonal Adjustments

The Importance Of Seasonal Adjustments

The Importance Of Seasonal Adjustments

Moneybox
A blog about business and economics.
Feb. 10 2012 3:48 PM

The Importance Of Seasonal Adjustments

Here I am merrily reading about China's trade balance in January and this seems alarming:

Imports plunged 15.3 per cent, leaving China with a trade surplus of $27.3bn on the month.
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That's a huge swing! But then the very next graf:

However, the numbers were significantly distorted by China’s New Year holiday last month, which brought the country’s businesses to a standstill for a full week.

Well, okay, if you lose 25 percent of your business days and imports only plunge 15.3 percent then it's not really clear that anything's plunged at all. This is why you need good seasonal adjustments. Which is not to blame the FT for reporting without a good seasonal adjustment, what reporters do is rely on government statistical agencies to give us data to analyze and the Chinese state is not yet up to the task of reporting economic information in a reliable and sophisticated way. It's easy to forget amidst all the arguing about "big government" that these little things that the US government does—and does quite well—play an important role in making the country work.