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SEASONAL INDICES
A seasonal index is a measure of how a particular season compares
with the average season.
Consider the monthly seasonal indices for unemployment given in
the table
below:

Seasonal indices are calculated so that their average is 1 . This

means that the sum of the seasonal indices equals the number of
seasons. Thus, if the seasons are months, the seasonal indices
add to 12. If the seasons are quarters, then the seasonal indices
would add to 4, and so on. January has seasonal index of
1.1which means, January’s unemployment is 10% above average.
September’s unemployment is 15% less than average.

Deseasonalising is the process that is used to remove the seasonal

effects from a set of data. This allows any underline trend to be made
clearer.
We can use seasonal indices to deseasonalise time series. To
calculate deseasonalised data, each entry is divided by its
seasonal index as follows.

Deseasonalising data
Example: Deseasonalise the quarterly sales figures of Summer
Year1 using the data and seasonal indices tables below.
Solution: Deseasonalised data for ‘Summer 1’ = Summer 1 data =
920 = 893
Summer seasonal index
1.03

Calculating seasonal indices

Example: Mikki runs a shop and she wishes to determine quarterly

seasonal indices
based on her last year’s sales, which are shown in the table
below.

Solution: Using the above formula to find the seasonal index

seasonal index = value of the quarter

quarter average

Find the quarter average

quarter average = 920 + 1085 + 1241 + 446 = 923

4
Find the seasonal index of each season
seasonal index Summer = 920 = 0.997
923

seasonal index Autumn = 1085 = 1.176

923

seasonal index Winter = 1241 = 1.345

923

seasonal index Spring = 446 = 0.483

923

Calculating seasonal indices (several years’ data)

Suppose that Mikki has in fact three years of data, as shown. Use
the data to calculate seasonal indices, correct to two decimal
places.

Solution: The seasonal average of year 1 was found previously

Find the quarter average for year 2

quarter average year 2 = 1035 + 1180 + 1356 + 541 = 1028

4
Find the seasonal index of each season

seasonal index Summer = 1035 = 1.007

1028

seasonal index Autumn = 1180 = 1.148

1028

seasonal index Winter = 1356 = 1. 319

1028

seasonal index Spring = 541 = 0.526

1028
Find the quarter average for year 3

quarter average year 2 = 1299 + 1324 + 1450 + 659 = 1183

4
Find the seasonal index of each season

seasonal index Summer = 1299 =1.098

1183

seasonal index Autumn = 1324 = 1.119

1183

seasonal index Winter = 1450 = 1.226

1183

seasonal index Spring = 659 = 0.557

1183

To find the seasonal indices of the 3 years we need to find the

average seasonal index of each season.

QUESTIONS
1 The table below shows the monthly sales figures and seasonal indices (for
January to
November) for a product produced by the U-beaut company.
a Complete the table by calculating the missing seasonal index.

b Interpret the seasonal index for

i February
ii August

2 The table below shows the quarterly newspaper sales of a corner store for
Year 1. Also
shown are the seasonal indices for newspaper sales for the first, second and
third quarters.
Complete the table.

3 Each of the following data sets records monthly sales ($000s). Use the data
to determine
the seasonal indices for the 12 months. Give your results cor rect to two
decimal places.
Check that your seasonal indices add to 12.

4 The number of waiters employed by a restaurant chain in each quarter of

one year, along
with some seasonal indices which have been calculated from the previous
year’s data, are
given in the following table.
a What is the seasonal index for the second quarter?
b The seasonal index for Quarter 1 is 1.30. Explain what this mean in terms of
the average
quarterly number of waiters.
c Deseasonalise the data.

5 The following table shows the number of students enrolled in a 3-month

computer systems
training course along with some seasonal indices which have been calculated
from the
previous year’s enrolment figures. Complete the table by calculating the
seasonal index for
spring and the deseasonalised student numbers for each course.

6 The following table shows the monthly sales figures and seasonal indices
(for January to
December) for a product produced by the VMAX company.
a Complete the table by:
i calculating the missing seasonal index
ii evaluating the deseasonalised sales figures
b The seasonal index for July is 0.90. Explain what this means in terms of the
average
monthly sales.
ANSWERS
1a 1.0
bi In general, in February, monthly sales are 30% more than in an average month.
Ii In general, in August, monthly sales are 30% less than in an average month.

b In Quarter1therestaurantchainemploys30% more waiters than the number employed in

an average quarter.

5
6

c In July the VMAX company records 10% fewer sales than in an average month.