Seasonality

Many economic and business activities follow seasonal patterns. Retail sales rise sharply before major holidays. Ice cream sales peak in summer. Heating fuel demand rises in winter. Tourism, agriculture and construction all have strong seasonal patterns. Unemployment may rise at certain times of year, for example after temporary holiday jobs end.

For example, a toy retailer might earn a large share of its annual revenue in the weeks before a major gift-giving holiday, with much lower sales in the other months.

Seasonality matters for businesses because it affects staffing, stock levels, cash flow and financing needs. A seasonal business may need to borrow to build stock before its busy period and repay the loan afterwards.

It also matters for interpreting data. Comparing December sales with November sales might suggest booming growth, when the rise simply reflects normal seasonal patterns. To avoid such misinterpretation, statistical agencies often publish seasonally adjusted figures, and analysts compare results with the same period in the previous year.

In financial markets, some investors study seasonal patterns in returns, although such patterns are often unreliable once trading costs are considered.