Seasonality

economic-dictionary

Seasonality is a concept frequently used in economic study. It assumes that a large part of the economic variables undergo regular fluctuations or changes over time, which makes them predictable and facilitates their temporal study.

The fact that the aforementioned regular variations occur makes many aspects of the present to be expected. In other words, behavior patterns are frequently formed in historical series that can be classified in time periods and that show the evolution of some economic aspect, such as the demand for goods or services, supply, consumption, employment data. , prices, among others.

Seasonalities are usually defined within annual periods, although it is also possible to express their fluctuations in monthly or quarterly periods, although it is less frequently.

The different periods in which this variability occurs can be considered as seasons and hence the name given to this phenomenon or behavior.

Example of seasonality

A clear example of this can be found in the analysis of unemployment data in a country or beach area and in which unemployment obviously decreases in summer periods. Then, seasonally adjusted allows you to see the variation in the actual employment data without taking into account this important effect.

Another example related to consumption can be the outerwear market. In this sector, demand rises in times of lower temperatures, as does heating consumption. However, the requirement for these goods and services decreases in the spring and summer months each year.

Importance of measuring seasonality

Following these examples, we understand the importance of this statistical pattern when it comes to improving forecasts by producers of goods and services. They are able to greatly adapt their templates and raw material requirements according to the offer that they are going to launch at each point of the calendar. This, because they know the behavior that the demand usually has.

Often this characteristic conditions the variables on which it is applied, often distorting their meanings. To do this, statistical studies try to seasonally adjust these time series. In this way, realistic readings are obtained in which time has less effect.

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