The Monthly PMA Business Cycle Index (PMABCI) – June 2017
An improvement in both the West bank and Gaza Strip
The PMA has released the results of its Business Cycle Index (PMABCI) for June 2017. The results revealed subdued improvements in the indices of both the West bank (WB) and Gaza Strip (GS), which pushed the overall index up slightly from -0.4 points in last May to around 0.2 points this month. However, this index remained well below its level in the corresponding month in 2016, when it scored 10.5 points.
The WB's index continued to improve but at a very slow pace, increasing marginally from 14.2 points in May to 14.4 points this month, mainly due to slight rises in the industrial sub-sectors' indices. In general, indices of food, textile, paper, plastics and engineering industries have all marginally increased. In contrast, other sub-sectors' indices (leather, traditional industries, chemical and pharmaceutical industries, and construction industries) declined, while furniture index maintained the previous level.
This insignificant rise came as a backdrop of mild increases in production and sales this month, as industrial firms' owners indicated. However, owners expected lower production levels in the coming months.
Similarly, the highly volatile index in GS witnessed some increase from -38.6 points in May to around -37.2 points in this month, owing to relative rises in indices of paper and engineering industries sub-sectors. Nonetheless, the remaining sectors' indices relatively stabilized.
It is worth noting that all indices of Gazan industrial activities (except for the food index) stayed in the negative zone for the fourth consecutive month, while the overall index remained stuck there for more than 40 months. Those negative values reflected the adverse political and economic conditions in the Strip, the continued Israeli siege; near-complete closure of the Rafah border crossing, and prolonged delays in reconstruction efforts. In the same context, all industrial firms' owners foresaw the same or slightly worse performance (production and sales) during this month. However, their expectations for toward near future have improved, pulling Gazan index up.
It is noteworthy that the PMABCI is a monthly index, which aims to capture the state and evolution of economic activity in Palestine by tracking the performance of the industrial sector, especially fluctuations in production and employment levels and their implications for the economy at large. The maximum value of the PMABCI is positive 100 point, while the minimum is minus 100 point; a positive value indicates favorable economic performance, while a negative value indicates bad performance. On the other hand, a value close to zero indicates that economic performance did not change and is unlikely to do so in the near future.
PMA Business Cycle Indicator (PMABCI)*
Source: PMA (2017). PMABCI, June, 2017.
* revised series.