Limitations of Seasonal Indices

Despite the above usefulness in the field of business, economics, and society at large, the seasonal indices suffer from the following limitations for which necessary precautions should be taken in their use.

• They are computed on the basis of an unrealistic assumption that the seasonal always change in some regular and systematic pattern.
• They cannot be measured definitely and precisely by any of the methods discussed.
• They consist of a series of measures each of which usually differs considerably from 100.
• They may not have any significance for a particular year; through they indicate a pronounced pattern.
• If the pattern of seasonal variations in a series is not stable, any average pattern may give a poor representation of the actual seasonal variation taking place during the given year.