In the Financial Post, MLI senior fellow Philip Cross writes that Canada is about to become a very busy place. GDP in a typical September is 10% above the seasonal low in January. "Since seasonal swings of 10% or more are routine, a small error in estimating seasonality can easily produce results in which residual seasonality swamps all other signals from the data," Cross writes.
Why Canada's financial news is often a thinly disguised weather report
Philip Cross, Special to Financial Post | 13/08/30
Welcome to September, Canada's busiest month.
The quickened pace might come as a shock to you, in your life, because you just left August where the living is easy.
Economic activity in Canada reaches its peak every year in this month, as measured by the total value of all we produce. As a result, GDP in a typical September is 10% above its seasonal low in January.
This is startling volatility compared with what Statistics Canada reports in its seasonally adjusted data after removing the recurring seasonal peaks and valleys from the data. In those numbers a 1% monthly change would leave any economist's mouth agape.
There are very good reasons why the country's statistical overlords — of which I was one for many years — attempt to sterilize the affects of seasonality. If change was always explained away by the affects of the weather, then decision makers of all types, from investors to business leaders to statistical agencies, would never have even a modicum of certainty about the economy. And since there is no country where seasonality has a bigger affect than in Canada, there is no country where removing it is as important ... to read the rest of Cross's column, click here.
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