Employment Cost Index: Annual seasonal adjustment process
Seasonal adjustment removes the effects of events that follow a more or less regular pattern each year. Over the course of a year, such events affect the rate of wage and benefit change. For example, wage and benefit adjustments in state and local governments, especially schools, are concentrated in the June-September period. Increases in the Social Security tax rate and earnings ceiling, when they occur, take effect in the December-March period. Wage and benefit adjustments in construction typically occur in the summer when there is the most activity in the industry. Adjusting for these seasonal patterns makes it easier to observe the cyclical and other nonseasonal movements in the series.
At the beginning of each calendar year seasonal adjustment factors are calculated for use during the coming year and revisions of historical seasonally adjusted data are made for the most recent 5 years. For more information about seasonal adjustment, see Seasonal adjustments in the Employment Cost Index and the Conversion to NAICS and SOC.
During this process all published series are reviewed for seasonality. In some instances series no longer exhibit seasonality and are dropped from the seasonally adjusted News Release tables and are retained in the historical tables. In other instances series are added when they begin exhibiting identifiable seasonality and are added to the seasonally adjusted data tables along with 5 years of historical data.
Employment Cost Index series are seasonally adjusted using either the direct or indirect seasonal adjustment method. Indexes at comparatively low levels of aggregation, such as the construction wage index, are adjusted by the direct method; that is, dividing the index by its seasonal factor. Seasonal factors are derived using the X-13 ARIMA seasonal adjustment program developed by the U.S. Census Bureau. Most higher level aggregate indexes, such as civilian or private industry workers wages or benefits, are seasonally adjusted by the indirect method, a weighted sum of seasonally adjusted component indexes, where the weights sum to 1.0. Industry and occupational series that are seasonally adjusted by the indirect method are based on industry and occupational components, respectively.
Employment Cost Index seasonal factors and historical listing:
Last Modified Date: April 26, 2018