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

The overall index continued to decline

The PMA has released the results of its Business Cycle Index (PMABCI) for September 2017. The results revealed a slight deterioration in the overall index owing to the decline in the West Bank's index, and despite the improvement in the index of Gaza Strip. As a result, the PMABCI decreased from -4.3 points in August to around -6.2 points this month, but remained below the corresponding month in 2016, when it scored 7.6 points.

In the WB, most industrial sub-sectors' indices declined, leading to a notable drop in the WB's index from 14.2 points to 5.0 points. The textile index fell (from 4.4 points to 2.2 points), the construction industries index decreased (from 1.4 points to 0.0 points), the furniture index declined (from 3.8 points to 0.9 points) and the engineering industries index dropped (from 0.3 points to -2.8 points). Nonetheless, the remaining sub-sectors' indices of: food, leather, plastic, construction industries, and chemicals and pharmaceutical industries have all marginally increased.

Anyway, the drop in the WB's index resulted from declining sales during September, in addition to lower withdrawal from inventory. At the same time, future expectations of production and employment levels have also fallen, as industrial firms' owners indicated. 

However in GS, the highly volatile index experienced a relative improvement following the sharp drop in the previous month, increasing from -50.6 points to around -40.2 points as most industrial sub-sectors' indices rose. The furniture index improved remarkably (from -13.3 points to -6.1 points), the construction industries index increased (from -12.7 points to -9.9 points), the chemical and pharmaceutical industries index rose (from -2.0 points to -0.7 points) and the plastics index edged up (from -1.2 points to -0.8 points). At the same time, the indices of food and paper slightly declined, while the textile and engineering industries' indices maintained their previous level.

The relative improvement of the Gazan index this month reflected slower deterioration compared to the previous month rather than reflecting an increased activity. The decline in both production and sales proved to be slower this month, and the pessimism level declined as the firms' owners indicated. It is worth noting that the Gazan index remained stuck in the negative zone for around four years, which reflected the adverse political and economic conditions in the Strip, the continued Israeli siege, near-complete closure of the Rafah border crossing, and prolonged delays in 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.