Question
For the industrial production index for Norway, why do the unadjusted and seasonally adjusted values of total production differ by more than 5% in 2018?
Answer
In direct communication, the source explained:
The seasonally-adjusted indices for the total Production Index covering extraction, mining, manufacturing, and electricity is calculated based on a formula using the indices for the different subcategories (extraction, mining, manufacturing, and electricity) as well as the weights for each of these subcategory. The weights present the share that each subcategory has on the total, and are based on actual value added.
Hence, the weights in general and the yearly change in weights will also impact this series. In general there has been a quite large change (larger than normal) in the weights in the period 2016-2018, particularly for extraction, but also for manufacturing. This is related to the downturn for the Norwegian oil and gas industry (extraction) which took place in the period 2015-2017.
The weights for extraction (oil and gas) fell from 0.714 in 2016 to 0.618 in 2018. On the other hand, the weights for manufacturing increased from 0.231 to 0.298. Usually the weights from one year to another do not have these large changes.
The unadjusted series on the other hand is not based on this indirect formula with weights. Hence, since the weights changed quite a bit in the period 2016-2018 you get these large differences between the unadjusted and the seasonally-adjusted series for 2018.
One solution we will consider is do the seasonal adjustment for the total Production Index directly, instead of this indirect formula with weights.
The impacted series reside in the historical catalog (Norway » Industry » Industrial production » 2005=100) and are:
- IPITTUM.INOR = Industrial production index: Totals - Extraction; mining; manufacturing; electricity, (Index 2005=100, NSA)
- IPITTAM.INOR = Totals - Extraction; mining; manufacturing; electricity, (Index 2005=100, SA)
Related Releases
Index of production [Detailed IPI]