Altering the Seasonal Adjustment Option for Producing Seasonally Adjusted Data for the July 2005 Release

Frequently Asked Questions

 

Was the option that was altered developed specifically to handle the impact of the automobile incentives?

No. This option is used as a part of standard seasonal adjustment procedures at the Census Bureau but with a more conservative (restrictive) definition of what constitutes an atypical month. This month, a definition of atypical was used that is customary in statistical practice when there is advance knowledge that the month’s survey value has a strong potential to be atypical.

What was the impact of altering the seasonal adjustment option (additive outlier adjustment) for the July 2005 data month?

The impacted industry group showed an increase from June. If the July value had been treated as typical, the program would have taken part of the increase to be a seasonal effect and would have adjusted the data in a way that would have brought the adjusted percent change from June to July closer to zero. The altered option we used determined the increase in this combined NAICS industry group to be out of the ordinary. As a result, the June to July percent change in the adjusted value was left further from zero.

How was the survey value for a kind of business determined to be out of the ordinary?

Each month, independent indications of how each kind of business performed are researched as part of our normal review of the estimates to detect reporting errors. This research includes, but is not restricted to, conversations with companies in our survey, a review of publicly available press releases from both companies and industry associations, and a review of other economic indicators.

This month, the July value was considered to be out of the ordinary if it was found to be statistically atypical (as indicated by the appropriate t-statistics having a magnitude larger than a “standard” critical value) and independent sources indicated an impact from the automobile incentives.

Could the Census Bureau have overstated the increase?

The alteration affected the adjustment that had atypical results based on well-established statistical criteria. Its use minimized the chance of understating or overstating the increase.

 

  

Source: U. S. Census Bureau 
            Service Sector Statistics Division

Last Revised: August 11, 2005