The Monthly PMA Business Cycle Index PMABCI December 2016
Improvement in the WB's index, while Gazan index continued to decline
The PMA has released the results of its Business Cycle Index (PMABCI) for December 2016. The results revealed an improvement in Palestine's overall index, due to the increase in the West Bank's index, as Gaza Strip's index declined. As a result, the overall index rose from 1.1 points in November to around 2.9 points during December. Moreover, the index achieved a higher level than registered in December 2015, (-16.0 points).
In the WB, the index resumed its increase, climbing from a low level of 4.6 points, to around 8.1 points, but stayed lower than its average in 2016. The relative improvement in the WB's index resulted from: (i) increases in most indices, mainly the textile index which rose from -1.7 points to 0.6 points, and lesser increases in the indices of the sub-sectors of leather, construction industries, furniture, engineering industries, and chemical and pharmaceutical; (ii) a drop in the food index from 5.8 points to 4.8 points; and (iii) marginal drops in the indices of paper and plastic sub-sectors.
The foregoing climb came as both sales and production strengthened; and industrial firms owners' optimism improved moderately due to better expectations regarding production and employment levels in the near future.
In GS, the highly volatile index has significantly deteriorated again, falling from -11.8 points last November to around -12.9 points this month, remaining stuck in the negative area for more than three consecutive years (except for June 2015). However, the performance of sub-sectors was mixed. On one hand, the furniture index shrank from 0.9 points to -2.1 points, and the engineering industries index declined from -2.9 points to -4.9 points). On the other hand, the increases in the remaining sub-sectors were slight, except for food, whose index rose from 2.1 points to 5.2 points.
In contrast to the case in the WB, sales in Gaza have declined between November and December, resulting in significant accumulated inventories. In addition, pessimism exacerbated among firms' owners regarding production and employment. For 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 crises which remain without 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.