Comparing direct and indirect seasonal adjustment of gross domestic product (GDP) – methods paper
29 May 2026
Seasonal adjustment removes recurring seasonal patterns from a time series to reveal underlying economic activity. Aggregated time series, such as gross domestic product (GDP), can be seasonally adjusted directly or indirectly with benefits and drawbacks to each approach. International guidance is that either approach can be used for GDP. The official measures of GDP and expenditure on GDP in New Zealand are directly seasonally adjusted.
The seasonal adjustment balancing item, commonly referred to as the residual, is the difference between GDP growth rates using direct and indirect seasonal adjustment. In recent years there has been an elevated level of seasonality in the residual, presenting challenges for the interpretation and forecasting of GDP statistics. This paper presents a side-by-side comparison of GDP growth rates using direct and indirect seasonal adjustment, explores causes of differences in the results produced by each approach and the emergence of seasonality in those differences, and highlights the challenges posed by a change in approach.
