Monthly Seasonal Factors of Selected Economic Time Series (Part 1 of 5)

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Monthly Seasonal Factors of Selected Economic Time Series (Part 1 of 5)

This article presents the estimated seasonal factors of 62 economic time series classified into five major groups, namely,

(A)	Monetary and Banking Indicators (22 series);
(B)	Wholesale Price Index (17 series);
(C)	Consumer Price Index for Industrial Workers (one series);
(D)	Index of Industrial Production (18 series); and
(E)	External Trade (4 series).

The estimation of seasonal factors has been carried out by X-11-ARIMA method, a technical note of which is available in the previous article**. This article considers a uniform data length of 10 years ranging from April 1988 to March 1998 with respect to each series for estimation of seasonal factors.

Recently, the Central Statistical Organisation (CSO) has revised the series on Index of Industrial Production (IIP) by shifting the base year from 1981-82 to 1993-94 simultaneously releasing the revised monthly indices of all groups and sub-groups since April 1994 onwards. In order to make each series with a uniform base 1993-94=100, the past data (April 1988 to March 1994) of each IIP series are linked using the linking factor derived by dividing the 1993-94 annual IIP (with 1980-81 base) by 100 for each series. Further, in the revised base, the two groups, namely, Machinery, Machine Tools & Parts except Electrical Machinery and Electrical Machinery, Apparatus & Appliances have been merged and the merged group has been renamed as Machinery and Equipment other than Transport Equipment. CSO has also released the indices of this new series since April 1994. In order to compile indices (April 1988-March1994) for this new group, first the old indices of Machinery, Machine Tools & Parts except Electrical Machinery and Electrical Machinery, Apparatus & Appliances were combined with the help of their respective weights for the old series and then linked with the indices for the new group using the method described earlier.

Monthly seasonal factors for the year 1997-98, the average monthly seasonal factors for the period 1988-89 to 1997-98 (ten years) and forecasts of monthly seasonal factors for the year 1998-99 are presented in Table 1. Since peak and trough values of the seasonal factors are important for analysis, these are also presented in Table 1 along with their respective months. Based on the seasonal factors for last 10 years, ranges of seasonal factors, averages of these ranges along with their standard deviation are presented in Table 2. Figures 1 to 11 present the bar diagrams of monthly seasonal factors for 1997-98 (Actual) and 1998-99 (Forecasts) for 11 important variables. The monthly seasonal factors for these 11 series for the last 10 years are presented in Statement I. The salient features of the variation in seasonal factors of some selected series during the last ten years in general, and 1997-98 in particular, are briefly discussed in the subsequent paragraphs.

*	Prepared in the Forecasting Division of the Department of Statistical Analysis and Computer Services.
**	The previous study in this series was published in February 1998 issue of the Reserve Bank of India Bulletin.

A. Monetary and Banking Indicators

The seasonality in Broad Money (M3) is influenced by a variety of factors affecting its major components, viz., Currency with the Public, Demand Deposits and Time Deposits with banks. The seasonal pattern is much stronger in the case of Narrow Money (M1) when compared with M3. This is due to lesser seasonal fluctuations in the Time Deposits - the additional component which has nearly two-third share in M3. The average and standard deviation of the range of variation of seasonal factors for M3 are 2.58 and 0.36, respectively, while those for M1 are 6.54 and 0.60, respectively. During 1997-98, both M3 and M1 had April as peak month whereas trough occurred in February for M3 and in August for M1. During 1997-98, WPI - Foodgrains had seasonal trough in May, corresponding to harvesting season, whereas peak for Currency with the Public (CWP) occurred in May which is complementary. Reserve Money (RM) also showed a seasonal pattern similar to CWP since currency in circulation is a major component of RM.

Aggregate Deposits (AD) of Scheduled Commercial Banks (SCBs) had seasonal peak in March whereas seasonal trough occurred in January. However, its two components, viz., Demand Deposits (DD) and Time Deposits (TD) had very different seasonal behaviour. Peak and trough for DD were in March and August respectively, while those for TD were in September and January, respectively. The average range and standard deviation of seasonal factors of TD were 1.89 and 0.07, respectively, while those for DD were much higher at 7.13 and 2.10, respectively. The seasonal behaviour of Bank Credit was similar to that observed in Demand Deposits and the two series had same peak and trough months - March and August, respectively. Average seasonal peak and trough of Investments (SCBs) occurred in August and March, respectively. Food Credit (SCBs), a component of the Bank Credit, had its peak seasonal factor in June and trough in March for 1997-98. It may be interesting to note that the range of variation of seasonal factors of Bank Credit has been slowly increasing whereas that for Food Credit has been sharply decreasing over the years. However, the range of seasonality for Food Credit at 23.85 in 1997-98 still remained high due to seasonal nature of agricultural operations. During 1997-98, seasonal peak and trough of Bank Credit to Commercial Sector occurred in March and August, respectively. The seasonal variation of Bank Credit to Commercial sector has been increasing over the years. The peak season for RBI Investments was seen in July and the slack season in March with a high and increasing range of variation.

B. Wholesale Price Index

There has been a general moderation in the seasonal behaviour of major price series The exception observed is in respect of Wholesale Price Index (WPI)-Minerals for which the range of variation of seasonal factors has been increasing over the years. During 1997-98, WPI-All Commodities registered its peak seasonal factors in September and trough in March which is consistent with its average behaviour over the last ten years. The seasonal movement of WPI-All Commodities is also consistent with that of WPI-Manufacturing which has a share of over 57 per cent in the former. The seasonal behaviour of WPI-Manufactured Products can be seen in direct contrast to that of IIP-Manufacturing though the former had much less seasonality than the latter. The seasonality in production of manufactured goods had clear impact on their prices and the seasonal movement of the two were nearly opposite with the peak of one being the trough of the other and vice-versa. Among the WPI series, WPI-Fruits and Vegetables observed the maximum range of variation of seasonality although the range was decreasing over the years, and had come down from 20.44 in 1988-89 to 7.56 in 1997-98. During 1997-98, seasonal peak for WPI-Primary Articles occured in December particularly due to low agricultural output as against the 10-year average peak in August.

However, the seasonal trough of WPI-Primary Articles remained in March, the same as in last 10-year average. Seasonal factors of WPI-Food Articles have been stable for the last ten years with peak in July/August and trough in March. During 1997-98, seasonal peak of WPI-Cereals, a sub-subgroup of WPI-Food Articles, occurred in December with a seasonal trough in May. The two items under WPI-Cereals, viz., WPI-Rice & WPI-Wheat had distinctly different seasonal patterns. This is largely because Rice is mainly a Kharif crop and Wheat a Rabi crop and their prices have seasonal peaks in August and February, respectively, a month before their harvesting season.

C. Consumer Price Index for Industrial Workers

During 1997-98, the CPI-IW series attained its seasonal peak in November and trough in April, as against 10-year average seasonal trough in March. Seasonal behaviour of WPI-All Commodities and CPI-IW were similar. Like WPI, the seasonal variation in CPI-IW has also been decreasing over the years. However, with average range 2.43 and standard deviation 0.30, this series had shown more seasonal variation than WPI-All Commodities.

D. Index of Industrial Production (IIP)

Most of the IIP subgroups considered here have strong seasonal patterns, closely related to busy and slack seasons of the economy. The seasonal peak for all the IIP series generally occured in March, but the trough periods occurred in different months for different series. The range of seasonal variation for IIP-General has been decreasing over the years. The seasonality in IIP-Food Products can be seen in contrast to the seasonal behaviour in WPI-Food Articles reflecting its input prices. Among the Use-based classified groups, IIP-Capital Goods Industries showed the maximum range of seasonal variation although it has been decreasing over time. IIP-Consumer Durables and IIP-Consumer Non-Durables had the peak in March but troughs occurred in April and October, respectively.

The range of variation for both these Consumer Goods groups remained high. However, the range of seasonal variation for IIP-Consumer Durables has been decreasing over the years. Among all the subgroups of IIP-Manufacturing, only IIP-Metal Products & Parts except Machinery & Transport Equipments showed increasing range of variation, whereas IIP-Electricity did not exhibit any change in seasonal pattern over the years. IIP-Transport Equipment & Parts showed high seasonality without any change in seasonal pattern. The seasonal variations for all other sub groups have been decreasing over the years.

E. External Trade

The peak month for both Export (US Dollar terms) and Imports (US Dollar terms) occurred in March during 1997-98. The seasonal trough for export occurred in November. Average range of seasonal factors for Exports was very high at 30.76 with a standard deviation of 1.73 while the corresponding figures for Imports were 19.84 and 1.72, respectively. The two components of Imports, viz., Oil Imports and Non-Oil Imports, exhibited distinctly different seasonal behaviour.

During 1997-98, Oil imports had seasonal peak in December while for Non-Oil Imports, it occurred in March. The trough months for the two series occurred in September and April, respectively. The range of variation of seasonal factors for Oil Imports has been decreasing over the course of time, starting from 41.55 in 1988-89 to 21.40 in 1997-98 whereas for the Non-Oil Imports this range has been increasing after 1990-91. Total imports exhibited same peak and trough months as Non-Oil Imports which constituted nearly 75-80 percent of Total Imports.

TABLE 1 : MONTHLY SEASONAL FACTORS OF SELECTED ECONOMIC TIME SERIES (April-march)

Series

Year

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

FEB

MAR

Peak

Trough

Value

Month

Value

Month

MONETARY AND BANKING INDICATORS

MONEY STOCK MEASURES

AND BANK CREDIT TO

GOVERNMENT

A. 1.1	Broad Money (M3)	1997-98	101.68	100.94	100.81	100.05	99.15	99.91	99.82	99.37	98.94	99.04	98.92	101.40	101.68	APR	98.92	FEB
		AVERAGE	101.52	101.14	100.65	99.75	99.00	99.93	99.87	99.70	99.45	99.31	99.24	100.42	101.52	APR	99.00	AUG
		1998-99	101.65	100.92	100.88	100.06	99.18	99.89	99.76	99.30	98.89	99.02	98.91	101.40	101.65	APR	98.89	DEC
A. 1.1.1	Narrow Money (M1)	1997-98	103.34	103.24	102.51	100.43	97.71	98.27	99.16	98.87	97.86	98.03	97.99	102.49	103.34	APR	97.71	AUG
		AVERAGE	102.83	103.62	102.31	99.74	97.10	98.44	99.21	99.47	98.56	98.53	98.86	101.15	103.62	MAY	97.10	AUG
		1998-99	103.34	103.16	102.51	100.42	97.74	98.29	99.16	98.84	97.84	98.03	97.92	102.54	103.34	APR	97.74	AUG
A. 1.1.1.1	Currency with the Public	1997-98	103.37	105.34	103.89	100.53	97.28	95.24	98.16	99.71	99.25	98.68	99.45	99.07	105.34	MAY	95.24	SEP
		AVERAGE	104.03	105.96	103.46	99.43	96.96	95.22	98.09	99.07	98.76	99.13	100.01	99.80	105.96	MAY	95.22	SEP
		1998-99	103.36	105.27	103.89	100.64	97.26	95.25	98.17	99.78	99.30	98.54	99.30	99.04	105.27	MAY	95.25	SEP
A. 1.1.2	Net Bank Credit to	1997-98	101.51	101.61	101.64	102.67	100.16	98.87	99.44	99.60	98.85	98.50	97.98	99.25	102.67	JUL	97.98	FEB
	Government	AVERAGE	100.91	101.40	101.00	102.09	100.52	99.45	99.87	100.23	98.59	99.43	98.37	98.01	102.09	JUL	98.01	MAR
		1998-99	101.52	101.57	101.66	102.60	100.10	98.86	99.41	99.63	98.90	98.40	98.00	99.22	102.60	JUL	98.00	FEB
A. 1.1.2.1	Net RBI Credit to	1997-98	103.89	104.29	104.27	105.81	98.90	95.79	98.09	98.39	97.42	97.65	96.10	99.19	105.81	JUL	95.79	SEP
	Government	AVERAGE	101.83	102.84	102.37	103.77	100.01	97.58	99.00	99.99	97.54	99.08	98.12	97.35	103.77	JUL	97.35	MAR
		1998-99	104.00	104.43	104.39	105.87	98.80	95.68	98.04	98.30	97.48	97.62	95.99	99.24	105.87	JUL	95.68	SEP
A. 1.1.3	Bank Credit to	1997-98	102.19	100.63	99.74	99.69	97.78	98.52	99.23	98.70	98.70	100.65	100.76	103.42	103.42	MAR	97.78	AUG
	Commercial Sector	AVERAGE	102.50	101.06	99.99	99.49	98.04	98.67	99.56	98.76	99.23	100.26	100.25	102.37	102.50	APR	98.04	AUG
		1998-99	102.17	100.60	99.81	99.75	97.80	98.52	99.18	98.59	98.60	100.65	100.74	103.41	103.41	MAR	97.80	AUG
A. 1.2	Reserve Money	1997-98	102.23	101.77	103.30	100.62	99.12	96.89	98.96	97.31	99.08	99.23	98.71	102.70	103.30	JUN	96.89	SEP
		AVERAGE	102.99	103.33	102.16	99.74	99.18	97.57	99.65	98.50	98.05	98.95	99.04	101.03	103.33	MAY	97.57	SEP
		1998-99	102.25	101.72	103.37	100.59	99.04	96.84	99.01	97.25	99.11	99.23	98.63	102.79	103.37	JUN	96.84	SEP

MAJOR LIABILITIES OF THE

RESERVE BANK OF INDIA AND

SCHEDULED COMMERCIAL BANKS

(i)

Reserve Bank of India

A. 2.1	Deposits(Banking	1997-98	99.18	95.75	99.52	108.45	102.50	100.43	98.35	96.59	99.25	101.50	98.54	99.28	108.45	JUL	95.75	MAY
	Department)	AVERAGE	100.86	97.74	98.04	103.12	102.27	102.17	100.64	98.05	96.41	100.73	98.99	101.14	103.12	JUL	96.41	DEC
		1998-99	99.28	95.88	99.67	108.62	102.42	100.42	98.32	96.59	99.27	101.54	98.34	99.05	108.62	JUL	95.88	MAY

(ii)

Scheduled Commercial Banks

A. 2.2	Liabilities to the	1997-98	90.03	95.31	106.77	113.32	105.82	103.60	93.59	91.32	104.15	99.10	101.35	95.30	113.32	JUL	90.03	APR
	Banking System	AVERAGE	98.76	93.82	96.86	105.91	109.45	113.34	100.13	94.47	98.30	101.79	99.13	89.18	113.34	SEP	89.18	MAR
		1998-99	90.20	96.04	107.91	112.90	105.15	103.05	93.93	91.58	104.01	98.46	101.08	95.84	112.90	JUL	90.20	APR

TABLE 1 : MONTHLY SEASONAL FACTORS OF SELECTED ECONOMIC TIME SERIES (April-march)


	Series	Year	APR	MAY	JUN	JUL	AUG	SEP	OCT	NOV	DEC	JAN	FEB	MAR	Peak	Peak	Trough	Trough
															Value	Month	Value	Month

A. 2.3	Aggregate Deposits	1997-98	100.79	100.31	100.28	99.88	99.68	100.99	100.14	99.14	99.03	98.86	99.52	101.42	101.42	MAR	98.86	JAN
		AVERAGE	100.54	100.09	99.90	99.97	99.91	101.26	100.09	99.47	99.75	99.27	99.47	100.25	101.26	SEP	99.27	JAN
		1998-99	100.81	100.29	100.33	99.83	99.62	100.95	100.16	99.17	98.95	98.85	99.51	101.41	101.41	MAR	98.85	JAN
A. 2.3.1	Demand Deposits	1997-98	101.41	100.06	100.96	98.80	96.85	102.36	98.02	97.45	98.85	98.63	98.98	107.69	107.69	MAR	96.85	AUG
		AVERAGE	101.60	99.97	99.77	98.54	97.33	102.32	98.18	99.40	100.27	99.38	100.03	103.25	103.25	MAR	97.33	AUG
		1998-99	101.18	100.04	101.22	98.82	96.88	102.43	97.95	97.44	98.67	98.50	98.83	107.95	107.95	MAR	96.88	AUG
A. 2.3.2	Time Deposits	1997-98	100.63	100.23	100.06	100.04	100.19	100.91	100.36	99.52	99.26	99.20	99.58	100.09	100.91	SEP	99.20	JAN
		AVERAGE	100.36	99.95	99.97	100.21	100.43	101.17	100.31	99.52	99.60	99.43	99.40	99.62	101.17	SEP	99.40	FEB
		1998-99	100.65	100.22	100.07	99.97	100.11	100.88	100.37	99.55	99.24	99.16	99.58	100.04	100.88	SEP	99.16	JAN

MAJOR ASSETS OF THE

RESERVE BANK OF INDIA

AND SCHEDULED COMMERCIAL BANKS

(i)

Reserve Bank of India

A. 3.1	Government of India	1997-98	105.54	106.04	103.68	99.00	95.82	93.72	98.41	99.49	98.12	99.59	99.94	101.04	106.04	MAY	93.72	SEP
	Rupee Securities	AVERAGE	104.85	106.83	104.35	99.31	96.75	94.36	98.42	99.16	97.64	98.66	99.56	100.32	106.83	MAY	94.36	SEP
		1998-99	105.72	105.83	103.52	98.99	95.66	93.51	98.20	99.57	98.17	99.76	99.96	101.23	105.83	MAY	93.51	SEP
A. 3.2	Balances held Abroad	1997-98	102.75	98.58	98.61	102.44	97.64	98.42	100.15	95.48	102.32	101.38	96.40	106.59	106.59	MAR	95.48	NOV
		AVERAGE	101.68	98.16	99.20	98.76	92.41	91.34	96.73	94.37	106.05	99.28	101.73	117.66	117.66	MAR	91.34	SEP
		1998-99	102.67	98.14	98.45	102.36	97.55	98.20	99.85	95.46	102.44	101.99	96.43	106.69	106.69	MAR	95.46	NOV
A. 3.3	Loans and Advances	1997-98	101.44	91.37	91.46	83.58	88.01	89.32	91.58	86.53	117.29	118.20	125.88	114.94	125.88	FEB	83.58	JUL
		AVERAGE	114.03	96.80	92.54	83.36	87.53	97.28	96.90	85.06	105.02	107.68	110.70	126.10	126.10	MAR	83.36	JUL
		1998-99	100.84	91.45	91.64	83.14	88.46	88.65	91.80	86.45	117.53	118.16	126.53	114.27	126.53	FEB	83.14	JUL
A. 3.4	Investments	1997-98	93.70	97.61	111.95	120.51	109.90	102.50	93.92	103.11	93.12	95.69	90.08	86.07	120.51	JUL	86.07	MAR
		AVERAGE	93.64	96.15	102.34	111.45	106.98	101.69	96.87	102.74	97.05	101.44	97.43	90.02	111.45	JUL	90.02	MAR
		1998-99	93.67	98.47	112.99	120.43	109.37	103.17	94.45	103.01	93.10	95.50	89.94	85.07	120.43	JUL	85.07	MAR

(ii)

Scheduled Commercial Banks

A. 3.5	Cash in Hand and	1997-98	98.94	99.68	100.34	104.06	102.94	99.58	95.48	94.02	101.42	102.97	101.14	99.08	104.06	JUL	94.02	NOV
	Balances with RBI	AVERAGE	102.66	97.29	99.24	100.94	104.74	103.92	100.46	95.92	98.66	102.14	99.99	94.76	104.74	AUG	94.76	MAR
		1998-99	98.79	100.09	100.54	103.96	102.73	99.40	95.39	94.12	101.51	103.00	101.01	99.01	103.96	JUL	94.12	NOV
A. 3.6	Asset with Banking	1997-98	98.77	101.24	105.23	110.94	99.86	98.40	96.21	91.81	98.57	95.37	99.14	102.71	110.94	JUL	91.81	NOV
	System	AVERAGE	111.82	99.41	95.54	99.89	108.64	104.35	100.77	87.32	97.05	98.04	99.60	98.54	111.82	APR	87.32	NOV
		1998-99	99.64	102.65	106.58	110.21	98.14	98.12	96.42	93.12	98.39	95.24	98.43	102.20	110.21	JUL	93.12	NOV
A. 3.7	Bank Credit	1997-98	101.76	100.87	99.74	99.11	97.40	98.39	98.90	98.67	99.47	101.08	101.24	103.35	103.35	MAR	97.40	AUG
		AVERAGE	102.55	101.36	100.16	99.30	97.53	98.86	99.10	98.58	99.79	100.65	100.36	102.09	102.55	APR	97.53	AUG
		1998-99	101.75	100.87	99.80	99.16	97.51	98.31	98.87	98.65	99.30	101.02	101.20	103.36	103.36	MAR	97.51	AUG