The extended PMA Business Cycle Index (extended PMABCI) – July 2018

Decline in the West Bank and improvement in Gaza Strip

The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for July 2018. The results revealed that the overall index fell notably during July due to the significant drop in the West Bank’s index, and despite the slight improvement in Gazan Strip. As such, the overall extended PMABCI slipped from -0.5 points in last June to its lowest from the beginning of this year, at -4.3 points this month. However, it remained higher than the index of July 2017 (-10.2 points)

In the WB, the index fell to 4.4 points this month compared to 12.1 points in June, owing to remarkable decline in all sectors, except the stability in the renewable energy index. The industry index notably declined (from 5.9 to 1.8 points), followed by falls in the trade index (from 1.3 to -0.3 points) and storage and transport (from 1.0 to 0.2 points). However, other sectors (agriculture, construction and IT) decreased by no more than 0.5 points each.

Overall, the decline in the West Bank's index reflected lower production and sales during July, along with worse future expectations about production and employment, as indicated by the economic firms' owners. 

Conversely, the index in GS notably picked from -30.3 points to around -26.9 points between June and July 2018, against the backdrop of the notable increases in the industry index (from -6.7 to -4.8 points), the trade index (from -19.1 to -18.0 points) and the agriculture index (from -2.5 to -1.0 points). On the other side, the construction index declined moderately (from -1.3 to -2.1 points). All other sectors’ indices (renewable energy, storage and transport, and communication and IT) have trivially changed by no more than 0.25 points for each.

It is worth noting that the Gazan index register mostly negative values, which reflects the adverse long-lasting political and economic conditions in the Strip, the continued Israeli siege, and the prolonged delays in reconstruction efforts. However, production and sales levels picked up during this month as indicated by Gazan firms' owners. They also showed optimistic future expectations about production and employment in the coming three months.

It is noteworthy that the extended PMABCI is a monthly index, which aims at capturing the state and evolution of economic activity in Palestine by tracking sectoral performance (especially fluctuations in production and employment levels). The maximum value of the index is positive 100 points, while the minimum is minus 100 points; 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.