Dear Liz and Sarah

Today we published our Review of ONS’s Treatment of Seasonality in quarterly GDP.

This review was prompted by concerns from some users, and media commentators, about the effectiveness of seasonal adjustment in the post pandemic period.

In recent years, quarterly (and monthly) GDP statistics published by ONS have shown stronger growth in the first half of the year than in the second half. This recent pattern of stronger growth in the first part of the year has reflected, at least in part, a series of one-off events (for example the bringing forward of economic activity in advance of the expected levying of increased tariffs).

Current statistical tests show no evidence of significant residual seasonality in quarterly or monthly GDP. However, emerging seasonal patterns can take several years to detect using standard methods. This means there remains a risk that early signs of change may not yet be visible in the statistical tests. It is important that ONS keeps and open mind as more data becomes available to understand this phenomenon.

To strengthen ONS’s approach going forward, we recommend that ONS should:

• Seek external assurance on its approach, particularly on the detection of emerging seasonal signals.

• Should continue increasing transparency around its methods and uncertainties.

• Complete work to rebuild and stabilise the specialist team responsible for seasonal adjustment.

We note and welcome the steps that ONS has already taken to address concerns in each of these areas. We look forward to considering evidence on further actions ONS provides as part of its regular reporting on progress with its plans for economic statistics.

Yours sincerely

Rob Kent-Smith

Deputy Head of the Office for Statistics Regulation

 

Related Links:

ONS response to the OSR compliance review on the treatment of seasonality in quarterly GDP