Why the Trend’s your friend

We were asked earlier today, regarding our Cairns Trend employment data, why our figures seemed so different to those from the Queensland Government’s own labour force data (see here). The Queensland Government Statistical Office data shows Cairns employment at 110,000 in Aug 2014, down from 117,000 a year earlier. Our own Conus Trend shows 113,600 in Aug 2014, up from 111,500. So which is right?

Well, they both are. It’s just that they are both looking at the raw data (which showed 116,500 up from 108,000 over the year) in different ways. The QLD Govt. are simply using a 12 month moving average (i.e. the sum of the past 12 months of data divided by 12) while we are using a seasonally adjusted Trend series (based on a complex mathematical model called X-12 ARIMA). We prefer the Trend series. To understand one reason why, consider that the 12mma attaches exactly the same importance to the monthly data from a year ago as it does to the data from this month. The Trend series attempts to adjust the base data for seasonal fluctuations and essentially tries to “best fit” a Trend curve to the raw data. The graph below, we hope, makes these differences clear. Neither is right or wrong; they’re just different. In this case we believe the trend is your friend!

 

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