1504.0 - Methodological News, Jun 2001  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 21/07/2001   
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REINTRODUCTION OF TREND ESTIMATES FOR RETAIL TIME SERIES

A trend estimate describes the underlying behaviour of a statistical time series by excluding the impact of seasonal and irregular, or unusual, influences on the data. The New Tax System (TNTS), which introduced the Goods and Service Tax (GST) and removed some Wholesale Sales Taxes from 1 July 2000, has both short and long term impacts on Australian retailing. The Australian Retail Trade series is recorded inclusive of the GST because it is used in the national accounts, and more generally, to measure household final consumption expenditure (i.e. the actual value paid by consumers). Short term impacts associated with the introduction of TNTS are not considered part of the underlying behaviour of the series.

As the TNTS impact could not be accurately measured at the time, the Australian Bureau of Statistics decided to suspend the trend estimate from July 2000 until spending behaviour stabilised and the impacts could be accurately measured and removed. As expected, it took some months for regular spending patterns to be re-established and this process was further complicated by unusual spending associated with the Sydney 2000 Olympic Games.

The introduction of TNTS impacted on the Retail Trade series in four ways:

  • spending patterns changed prior to the introduction of the GST. The principal impact on retail turnover pre-GST was an increase in the volume of goods sold as consumers brought purchases forward to June 2000.
  • from 1 July 2000 the Retail Trade series recorded turnover inclusive of the GST. The net effect of the TNTS (i.e. the removal of the Wholesale Sales Tax and the inclusion of the GST) resulted in a change in the valuation basis of the series, so a permanent level shift was introduced.
  • spending patterns in July 2000 were unusual as many industries had a decrease in sales as a result of consumers having brought purchases forward to June. While the price of most goods rose from 1st July 2000, the volume of goods sold across most industries and States dropped.
  • spending patterns were affected for a number of months after July (but not as dramatically as for the July month), and stabilised spending patterns emerged slowly and differentially across industries.

Time Series Analysis section undertook special corrections to stabilise the seasonally adjusted estimate from June to November 2000 and monitored whether the spending behaviour had stabilised. The longer the period of time the trend was suppressed, the more chance there was that non-GST related effects would affect the estimation of the level shift size at July 2000. Balancing the competing demands, the ABS chose to use data up to November 2000 as a good compromise to reintroduce trend estimates.

An intervention analysis was used to simultaneously estimate the impact on the Australian retail trade series of unusual spending in June and July 2000 (treated as prior corrections) and a permanent level shift (trend break) between June and July due to the inclusion of the GST, and exclude the Olympic impact in September.

Figure 1 shows the trend and seasonally adjusted estimates of the total Australian retail turnover after the pre-GST and post-GST impacts were appropriately prior corrected. The estimated level shift provides a starting point of the trend under the TNTS environment.

Figure 1: Australian total retail turnover

(current Figure price)
graph - Current figure price



The Retail Trade current price trend series was reintroduced with the December 2000 issue of the ABS's Retail Trade publication (cat. 8501.0). The impact of unusual pre-GST and post-GST (not a permanent level shift starting from July) spending was removed from the chain volume series and the series provided a good measure of the levels and changes in the volume of retail turnover.

For more information, please contact Mark Zhang: (02) 6252 5132

E-mail: mark.zhang@abs.gov.au