Analysis of the UK National Economic Review, June 2014 (Research Paper Sample)

Analysis of the UK National Economic Review, June 2014 (Name) (Institution) (Date) Table of ContentsTime Series and Regression and Correlation Analysis3Time Series Analysis3Regression and Correlation Analysis5Report7Main Finding of the Project7Bibliography 10Appendix ………………………………………………………………….…………………….11 Time Series Analysis The use of time series can be observed in the recent UK economic review, June 2014. Philip Wales from the office of the chief economic adviser presents these statistics to create a picture of economic performance from recent economic data. An analysis of Figure 2: "Volume of retail sales and household final consumption expenditure, constant price seasonally adjusted" and Table 1: Headline labour market statistics aims to provide evidence of time series. Figure 2: Volume of retail sales and household final consumption expenditure, constant price seasonally adjusted Source: Phillip Wales, Office for National Statistics, June 2014. Figure 2 shows a systematic pattern in the presentation of data where the components are identifiable (retail sales and household final consumption and constant price seasonally adjusted). From the figure, household strength in spending is shown together with retail sales. The information shows evidence of continuous time series as observations of the economy are made on a yearly or monthly basis. The period between 2009 and 2012 experienced stagnated volumes in retail sales and consumer spending. After 2012, both series relatively increased strongly as observed between 2012 and 2014; volumes increased steadily from 100 in 2012 to 104 in 2014 showing an upward tendency or trend. Table 1: Headline labour market statistics Source: Philip Wales, Office of National Statistics, June 2014 Table 1 shows labour market statistics in relation to rates of employment, unemployment, inactivity rates and average weekly earnings of the period 2012 to 2014. The rate of employment has steadily increased from Jan-March 2012 at 70.6 to Jan-March 2014 at 72.7. The increase in employment has seen a reduction in unemployment rates in the same period from 8.2 to 6.8. When this data is presented in a graph, it will show a constantly increasing rate of employment and decreasing rate of unemployment. The trend of this graph could also be determined using averages. In case the averages change with time, it may be observed as evidence of a trend in the series. In table 1, there is use of averages of weekly earnings. These evidently change in time as observed from Jan-March 2012 at 0.8% and Jan-March 2014 at 1.7%. The average weekly earnings have increased from 0.8% to 1.7% in a period of two years from 2012 to 2014. This shows a continuous upward trend. Regression and Correlation Analysis Regression analysis provides the relationship between independent and dependent variables (Laudański 2013). It seeks to establish the nature of the relationship between variables. In economics, regression analysis serves as the basic technique for estimating or measuring the relationship among economic variables, which comprise of the essence of the economic theory and life. For example, when examining the relationship between two variables; demand (Y) and price (X), the likely value of X for a given value of Y can be estimated. Table 2 and 3 show demand and supply indicators of the UK. Table 2: Showing part of the demand side indicator Source: Philip Wales, Office of National Statistics Table 3: Showing part of the supply side indicator Source: Philip Wales, Office of National Statistics The relationship between the variables supply and demand can be examined from the given tables 2 and 3. In table 2, demand seems to increase slightly from a previous period. For example, business services demand increased from 2.1 in 2012 to 2.2 in 2013, between 2013 and 2014 it reduced from 2.2 to 0.9. Examining labour supply in the same period, 2013 to 2014, it is observed that employment rate was slightly increasing as unemployment decreased. Business services require labour force in order to carry out operations successfully. In this case, it is evident that the increased demand had an impact on the labour force supply. As the demand increases, the output level increases, which require enough labour in production to sustain increasing demand. This example shows evidence of regression in the relationship between the two variables, demand and supply. Similar to regression, correlation tells of the relationship between two variables. Take for example, the variables income and expenditure of a family. It is evident that when income increases, expenditures increases and when income decreases expenditure decreases, as well (Laudański 2013). This shows that they are related in concept change in either variable is influence by the other. When using correlation, the example in Table 2 and 3 could be used to explain the link between the variables supply and demand. As observed, when the demand increases in Table 2, labour force supply increases where unemployment decreases. This shows the link demand in business and labour supply. Spearman’s Rank Correlation Coefficient identifies and tests the strength of a relationship between variables or two sets of data. This is a statistical method used to assist with proving or invalidating a given hypothesis. Report This study was conducted to examine the application of statistics in real life situations. The study analysed the efficacy and significance of time series, and regression and correlation in economics. The data was obtained from the UK Office of National Statistics. It provided statistics of the national UK economy as per the recent economic analysis in June 2014. The data observed was the volume of retails and household final consumption expenditure, labour market and the demand and supply side indicators. Data was collected through census and generalization, as information such as household income and retails sales require collecting directly from an individual or business. In this case, not every family or business is approached to provide the required information; sampling is used to provide representatives of the target population. The data is collected and analysed by professionals before a final report is produced. Main Findings of the Project The findings from the study provide that the flow in a graph of time series is based on the trend. For example, an upward trend is observed when volumes of a variable tend to increase. As observed in Figure 2, the period between 2009 and 2012 remained significant as household spending strength had diminished. The household strength later increased steadily from 2012 to 2014. This is evident from the increasing volumes of 100 to 104 between 2012 and 2014. This increase showed an upward trend of the graph from the period 2009 and 2014. In table 1, the use of averages can be used to determine th...