The Monthly PMA Business Cycle Index (PMABCI) – November 2016

The PMA has released the results of its Business Cycle Index (PMABCI) for November 2016. The results revealed a notable decline in Palestine's overall index, due to the drop in the indices of the West Bank and Gaza Strip. As a result, the overall index decreased from 8.1 points in October to around 1.1 points during November. Nevertheless, the index achieved a higher level than registered in November 2015,     (-16.8 points).

In the WB, the index continued to decline significantly, plunging to its lowest level in ten months (4.6 points), compared to 14.0 points in the previous month. This resulted from (1) significant declines in the indices of: the textile sub-sector (from 3.4 points to -1.7 points), the traditional industry sub-sector (from 1.9 points to -0.2 points), the furniture sub-sector (from 1.2 points to -0.4 points), and the engineering and precious metals sub-sector (from 0.3 points to -0.6 points); (2) lesser drops in the indices of paper and chemical sub-sectors; and (3) slight increases in the indices of food, leather, construction industries, and plastic sub-sectors. The foregoing decline came as both sales and production weakened; and industrial firms owners' optimism dimmed over concerns regarding production and employment levels in the near future.

In GS, the highly volatile index has significantly deteriorated from -1.3 points last October to around -11.8 points this month, remaining stuck in the negative area for more than three consecutive years (except for June 2015). The recent decline came as most of the industrial activities’ indices dropped, particularly that for the construction industries sub-sector, which slipped substantially from 5.2 points to        -11.0 points, due to the continuous ban on importing construction materials.

As in the case of the WB, both sales and production in Gaza have declined between October and November, while firms owners' outlook on production and employment remained substantially negative. Thus the severe obstacles continued to suppress economic activity in GS, particularly in the industrial sector. Those obstacles include the continued Israeli siege, near closure of the Rafah border crossing, and prolonged delays in reconstruction efforts, in addition to the long-standing fuel and electricity crisis, which remains without a radical solution.

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.

 

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