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Unemployment numbers actually recorded in a town for the second quarter of the year 2000 were 4,700. The underlying Trend at this point was 4,300 people and the seasonal factor is 0.92.
Using the multiplicative model for seasonal adjustment, what is the seasonally adjusted figure (in whole numbers) for the quarter?
A: 5109 (4700/0.92)
I am so stuck on this, I have looked at the answer as above and can see what they have done but I have no idea why they have taken the 4700 instead of the 4300. Please help!
Thanks
Vicki
If you were asked to forecast the unemployment then certainly would have taken the trend and adjusted.
However, that is not the case here. Here we know the actual unemployment (4,700). However because it is lower than it would have been because of the seasonality. The seasonally adjusted figure is calculated what the actual figure would have been if it was not seasonal (i.e. 5109)
Hello, Sir!
Can I ask one question? Why we do not take as seasonally adjusted figure our trend 4300? ( as far as I understand we take the moving averages in order to get a figure that we would have if there wasn’t seasonality) thanks in advance!If it is seasonally adjusted, then the trend will already have been adjusted by the seasonal variation.
Then in this particular exercise we were provided by the wrong trend figure? As our equation is Y=T*S so in order to get seasonally adjusted figure we need Y/S, right?
Sorry for bothering you 🙁You are not bothering me 🙂
The trend figure is just the average – it will not just be seasonal variations that will affect it, there can be random variations as well.
The ‘trick’ is that the question gives the actual numbers and wants to know the seasonally adjusted figure (it does not ask for a forecast figure – if it had then you would take the trend and adjust that by the seasonal variation).
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