The Monthly PMA Business Cycle Index (PMABCI) – April 2017
An improvement in the overall index due to its decline in the WB
The PMA has released the results of its Business Cycle Index (PMABCI) for April 2017. The results revealed an improvement in Palestine's overall index at the backdrop of a rise in the West Bank index, and despite a decline in Gaza Strip index. As a result, the overall index increased from -12.1 points in last March to around -7.9 points this April, but remained well below the corresponding month in 2016, when it stood at 3.2 points.
After three months of continuous decline, the WB's index picked up from -9.7 points to around -2.2 points, but remained locked in the negative area since January this year. This improvement came as a result of a rise in all industrial sub-sectors' indices, except for leather, whose index slightly declined. The highest increases occurred in construction industries, whose index grew after two months of consecutive falls, reaching 0.2 points, compared to -2.7 points in the previous month. Moreover, the food index rose from 1.2 points to 2.4 points, and the textile index increased from -2.2 points to 0.9 points, while improvements in the remaining sectors were considerably lower.
The better performance of the WB index reflected a slower pace of deterioration rather than real improvement, which is proven by the relative drop in production and sales this month, as industrial firms' owners indicated. However, owners expected better production levels in the coming months.
Conversely, the highly volatile index in GS has deteriorated after a temporary rise in the previous month, falling form -14.8 points to -19.3 points this month, owing to varying trends among the industrial sub-sectors. On one hand, both food and textile indices grew form -0.9 and -4.8 points, respectively, to 1.7 and -1.0 points. However, the remaining sub-sectors' indices fell, particularly the furniture index (from -3.9 points to -7.7 points) and engineering industries index (from -1.7 points to -5.0 points). Moreover, the construction index, which is characterized by high volatility, reflecting the ebb and flow of building raw materials entering the Strip, declined from -2.2 points to around -5.0 points.
It is worth noting that all indices of Gazan industrial activities (except for the food index) remained in the negative zone for the second consecutive month, while the overall index remained stuck there for more than three consecutive years. Those negative values reflected the adverse political and economic conditions in the Strip, the continued Israeli siege, nearly a complete closure of the Rafah border crossing, and prolonged delays in reconstruction efforts. In the same context, the Gazan industrial firms indicated lower sales and accumulated inventories during April, with even worse expectations in the near future.
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.