The PMA has released the results of its Business Cycle Index (PMABCI) for January 2016. The results showed that the overall PMABCI for Palestine has improved due to its continued climb in the West Bank (WB), and despite its decline again in Gaza Strip (GS), which widened further the index's divergence between the two regions (see below). Thus, the overall index picked up sharply to around -5.9 points this month, compared to around -16.0 points during last December. Nevertheless on yearly basis, the index remained substantially below its level in January 2015, at 3.9 points.
In the WB, the index has improved remarkably, from –16.0 points in December 2015 to around 0.5 points in January 2016. The textiles sub-sector led this improvement, as its index increased from -5.0 points to around 2.2 points, followed by an increase in the food sub-sector's index (from -2.0 points to 2.0 points) in the same period. Also the sub-sectors' indices for leather, paper, engineering industry, and furniture have all improved moderately, while the remaining sub-sectors' indices have declined marginally.
Despite the recent political and security turmoil in the WB which started in early October 2015, it was generally felt that the situation had not deteriorated seriously enough. This eased the public's concern and reduced industrial establishments owners' pessimism about the near future, based on increased production and decreased inventory levels in the comparison period.
In GS, the index continued to decline, reaching -22.5 points in January 2016, compared with -15.8 points last December. This deterioration reflected a drop in the indices of textile (from 0.0 points to -2.3 points), construction (from -4.2 points to -7.3 points), and lower declines in the indices of paper, furniture, and chemical and pharmaceutical sub-sectors; meanwhile the remaining sub-sectors' indices remained relatively stable. It is worth mentioning that except for June 2015, Gaza's index remained in the negative range for two consecutive years, which reflects the continuous dire and worsening political and economic conditions in the Strip as the contributing factors to this deterioration persisted. These factors included deficiencies in raw materials; shortages in electricity and fuel supplies; and prolonged delays in reconstruction efforts, in lifting the Israeli blockade, and in opening the Rafah border crossing. Thus, industrial firms' owners remained pessimistic about the near future, with expectations of weakening production and declining employment in the coming months.
It is worth mentioning 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