by Mike ‘Mish’ Shedlock
The BLS changed its seasonal adjustment model starting today going forward. The change skewed the data in a positive manner.
Additive vs Multiplicative Method Change
Beginning with the Unemployment Insurance (UI) Weekly Claims News Release issued Thursday, September 3, 2020, the methodology used to seasonally adjust the national initial claims and continued claims reflects additive factors as opposed to multiplicative factors.
Seasonal adjustment factors can be either multiplicative or additive. A multiplicative seasonal effect is assumed to be proportional to the level of the series. A sudden large increase in the level of the series will be accompanied by a proportionally large seasonal effect. In contrast, an additive seasonal effect is assumed to be unaffected by the level of the series. In times of relative economic stability, the multiplicative option is generally preferred over the additive option.