The Monthly PMA Business Cycle Index (PMABCI) – September 2016
Increase in the Index due to its improvement in Gaza
The PMA has released the results of its Business Cycle Index (PMABCI) for September 2016. The results revealed an increase in Palestine's overall index, supported by a remarkable improvement in Gaza Strip's index, and despite the decline in the West Bank's index. As a result, the overall index rose from 4.6 points in August to around 8.3 points during September. Nevertheless, the index remained lower than its value (13.2 points) achieved in September 2015.
In the WB, the index continued to decline to its lowest level in six months, down to 14.3 points compared to 18.9 points in the previous month. This comes as most of industrial activities' indices declined, particularly the food sub-sector's index (from 7.8 points to 6.8 points), and the textile sub-sector's index (from 5.6 points to 4.5 points). Conversely, indices of traditional industry and plastic sub-sectors have moderately improved, while the furniture index remained the same.
Moreover, data revealed a lower optimism about the near future among the industrial firms' owners, which was considered the main reason behind the drop in the WB index. Firms' owners expressed concerns regarding future production and employment.
In GS, the highly volatile Gazan index has remarkably improved during September, but it was still locked in the negative area for more than three consecutive years (except for June 2015). However, the index increased from -32.1 points in last August to around -1.2 points during this month, supported by improvement in most industrial sub-sectors, with the remaining sectors staying stable. The increase in the indices of food and textile sub-sectors were the engine for the improvement; the first increased from -9.3 points to 4.2 points and the latter from -6.8 points to -2.3 points. Moreover, the positive forecasts for production and employment in the near future have added to the Gazan index.
Nevertheless, this sudden progress could be plague, and doesn't negate the adverse effects of the several obstacles which continue to undermine economic activity in GS, particularly in the industrial sector. Those obstacles include the continued Israeli siege, closure of Rafah border crossing, and prolonged delays in reconstruction efforts, in addition to the long-standing fuel and electricity crisis that remains without any radical solutions.
I 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.