Seasonally Adjusted Annual Rate (SAAR) is used to adjust or remove the seasonal variation in the data. It is a statistical technique used to phase out any periodic swings due to the seasonal impact, say, in supply and demand data.
How to calculate it?
SAAR is calculated using a seasonal factor, multiplying with the unadjusted monthly estimate and then multiplying by the total number of months in a year.
Seasonal factor – To calculate seasonal factor, full-year data should be available of which average monthly or quarterly number is calculated. Then unadjusted monthly or quarterly number is divided by the annual average monthly or quarterly numbers.
Example: Business ‘B’ produced 240000 metal sheets in a year and 15000 in June. Therefore, seasonal factor for June is 15000/ (240000)/12)= 0.75.