The PMA Business Cycle Index (PMABCI) – January 2021
Improvement in the West Bank and Gaza Strip
The results of PMA Business Cycle Index (PMABCI) revealed a significant pickup in the overall index due to similar performance in both the West Bank and Gaza Strip. It managed to jump to its highest since last April, registering around -27.5 points this January, compared to -39.4 points in the previous month. However, the index maintained its well-below level compared to the corresponding month (-7.4 points).
In the West Bank, the index succeeded to register a remarkable growth, picking up from -36.0 points to -21.4 points, the highest in 10 months. This was resulted as all sectoral indices increased, except for the stability in the renewable energy index at -0.1 points. The trade index registered the biggest growth (from -17.4 to -10.4 points), followed by the manufacturing index (from -12.3 to -7.5 points). In the meantime, the rises in the remaining sectors were lesser; (from -1.8 to -0.9 points) for the agriculture index, (from -1.6 to -0.7 points) for the transport and storage index, (from -1.9 to -1.3 points) for the construction index, and (from -0.9 to -0.4 points) for the IT and communication index.
In general, the surveyed firm owners in the West Bank indicated a remarkable rise in production and sales during January. Moreover, they expressed high optimism about the near future, expecting higher production and employment in the three coming months.
Similarly, the index in Gaza Strip managed to compensate for the notable drop during the previous two months, registering a growth this month to nearby -42.0 points compared to -47.5 in last December. This was resulted as most of the sub-indices have picked up, headed by the trade index (from -38.6 to -33.7 points), followed by the transport and storage index (from -1.9 to -0.2 points) and the manufacturing index (from -7.5 to -6.5 points). Moreover, lesser rises have been seen in the indices of IT and communication (from -0.4 to -0.2 points), and renewable energy (from -0.1 to 0.0 points). Nonetheless, agriculture and construction have failed to match the overall trend, as both indices have declined during the comparison period. The index of the former has dropped from 2.0 to 0.5 points, while it declined for the latter from -1.0 to -1.8 points.
According the owners of the surveyed firms in Gaza, no fundamental changes happened during this month relative to the production and sales levels. Nonetheless, they expressed optimism about near future, expecting some improvement in production and employment in the three coming 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, sales and employment levels). The overall index is simply the sum of all sectoral indices. Its maximum 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.