What is a “Moving Average”?

A moving average is simply the average value of a data series over a period of time, where the values included “move” with the data series. For example, a 12-month centered moving average for an April observation is calculated as the average of the monthly values from the prior October (6 months before) through the following September (5 months ahead).

Moving averages like this are used to help see underlying trends in data that vary quite a bit from month to month, such as when there is strong seasonality in the underlying data.

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