The Monthly PMA Business Cycle Index (PMABCI) – October 2017

The overall index declined again

The PMA has released the results of its Business Cycle Index (PMABCI) for October 2017. The results revealed a continued deterioration in the overall index for the third month in a row, owing to the decline in the West Bank's index, which outstripped the improvement in the index of Gaza Strip. As a result, the PMABCI decreased from -6.2 points in September to around -7.6 points this month, and remained below the corresponding month in 2016, when it stood at 8.9 points.

In the WB, most industrial sub-sectors' indices declined, leading to a relative drop in the WB's index from 5.0 points to 3.2 points. The construction industries' index fell notably from nil to -1.4 points, followed by tiny declines in the sub-sectors' indices of: food, leather, plastics, paper, chemicals and pharmaceutical industries, and traditional industries. Nonetheless, only the indices of textile and engineering industries increased from 2.2 points to 2.6 points and from -2.8 points to -0.5, respectively. The drop in the WB's index resulted from declines in production and sales during October. At the same time, future expectations about employment levels have also fallen, as indicated by industrial firms' owners. 

However in GS, the index experienced a relative improvement following the sharp drop in the previous month, increasing from -40.2 points to around -36.9 points, as some industrial sub-sectors' indices picked up. The food index improved from -6.8 points to -6.0 points, the paper index increased from -1.9 points to 1.1 points and the engineering industries index rose from -9.2 points to -7.5 points. On the other hand, the remaining sub-sectors' indices maintained their previous level.

The relative improvement of the Gazan index this month resulted from of a slower drop in the production, and a decline in the levels of pessimism about the production and employment in near future, as indicated by industrial firms' owners . It is worth noting that the Gazan index remained stuck in the negative zone for the fourth consecutive year, which reflected the adverse political and economic conditions in the Strip, the continued Israeli siege, the near-complete closure of the Rafah border crossing, and the prolonged delays in the reconstruction efforts. 

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.