The PMA has released the results of its Business Cycle Index (PMABCI) for May 2016. The results showed an improvement in Palestine's overall index, due to an increase in the West Bank (WB) index, accompanied with a relative improvement in the Gaza Strip (GS) index. As a result, the overall index picked up to around 10.0 points during this month, compared to 4.1 points during last April, and around -0.1 points in May 2015.
In the WB, the index rose again to its highest level in around a year, reaching 20.4 points in May, compared to 15.4 points last month, supported by the improvement in the industrial sub-sectors' indices of textile (from 5.6 points to 7.3 points), construction (from -0.9 points to 0.6 points), leather (from -0.3 points to 0.8 points), and engineering (from 0.2 points to 1.4 points). While the remaining sub-sectors' indices either marginally increased or remained relatively stable. This improvement is attributed mainly to higher sales level during May. Moreover, industrial firms' owners continue to show higher optimism regarding expected employment in the near future, despite relatively stable expectations for levels of production.
In GS, the highly volatile index witnessed a slight improvement to -19.2 points, compared to -22.1 points in April. This increase resulted from the improvement in the indices of main industrial sub-sectors, specifically food (from -9.3 points to 0.0 points), and the textile (from -2.3 points to 0.0 points) during the comparison period. Moreover, the paper, chemicals, and plastic subsectors' indices have all marginally improved. However, the construction index notably declined in light of the shortage of raw materials, in addition to other declines in furniture and engineering sub-sectors, during the same period.
This relative increase resulted from higher sales levels during this month. However, pessimism about the near future remained high, and increased further during May affected by negative forecasts for future production.
It is worth mentioning that except for June 2015, Gaza's index remained in the negative range for more than two consecutive years, which reflected the dire and worsening political and economic conditions in the Strip, as the culprit factors persisted. Thus supplies of raw materials, electricity and fuel remained deficient; and prolonged delays in reconstruction efforts, lifting the Israeli blockade, and opening the Rafah border crossing continued.
It is also 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.