The Monthly PMA Business Cycle Index (PMABCI) – June 2015
An improvement in the index
The PMA has released the results of its Business Cycle Index (PMABCI) for June 2015. The results showed that the overall PMABCI has improved from -0.1 points during May to around 4.8 points this month, as it improved in both the West Bank (WB) and Gaza Strip (GS). However, it remained lower than its value in the corresponding month of 2014 (9.5 points).
In WB, the index has relatively improved to around 5.1 points this month, compared with 2.4 points during May, mainly supported by the improvement in the food sub-sector from 0.7 points to around 4.4 points during the comparison period. Moreover, the paper, chemical, plastic, engineering and leather sub-sectors have all improved in the same period, despite the decline in the textile and furniture sub-sectors.
During the current month, the majority of industrial activities witnessed a relative improvement, reflecting a more positive outlook on production and staffing levels for the near future. In this context, the sharp rise in the food index reflected intensive efforts by food enterprises to provide a wide range of goods on advent of the holy month of Ramadan
In GS, the index achieved further progress and registered a positive value for the first time in over a year thanks to a relative recovery in construction. Its index recovered notably from -13.1 points to around -5.8 points this month. This recovery came after many firms partially resumed operations in light of an increasing flow of raw materials entering the Strip. Nevertheless, this flow remained below its pre-war level, and significantly short of the required amounts for the reconstructing of GS. Also the food index saw some improvement on account of preparations for the holy month of Ramadan.
Additionally, sub-sectors of paper and furniture have also improved in varying degrees, while the indexes of chemical and plastic industries declined. As a result, GS index has remarkably rebounded from -14.1 points in May to around 1.3 points this month, supported by improved levels of production and sales.
However, optimism among firms' owners about the near future remained weak as Gazan industries continued to suffer from numerous obstacles. Beside the shortage in raw materials (e.g. woods, some iron cylinders, and chemicals), industries face continued shortages in electricity and fuel supplies, and prolonged delays in reconstruction efforts, in lifting the Israeli blockade, and in opening Rafah border crossing.
It is worth to note 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.