The extended PMA Business Cycle Index (extended PMABCI) – August 2019
Drop in the West Bank and improvement in Gaza continued
The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for August 2019. The results showed that the overall index has marginally picked up against the backdrop of moderate increase in Gazan index, despite the slight decline in the West Bank’s index. However, the overall index is maintaining a negative value for the fifth consecutive month in light of current public budget crisis. It registered around -13.9 points in this August compared to -14.3 points in the previous month, but remained lower than its corresponding level of the last year (about -3.8 points).
Looking at the WB’s index, it slipped from about -10.2 points in last July to around -11.3 points this month due to falls in indices of industry, construction and the communications. The industry index witnessed the biggest change as its index slipped (from -3.4 to -5.4 points), followed by the construction index (from 0.0 to -0.7 points) and the communication index (from 0.0 to -0.2 points). Conversely, the agriculture index rose (from -1.4 to 0.0 points) and the trade index grew (from -5.7 to -5.4 points), while the storage and transport index registered 0.5 points compared to 0.2 points in last July. Meanwhile, and for the third consecutive month, the renewable energy is hovering around 0.0 points.
In general, the surveyed firm owners indicated a decline in production during the previous period, in addition to remarkably lower expectations on future production during the coming three months.
Meanwhile, Gazan index moved forward in its gradual progress for the fifth month in a row, achieving its best value in about 30 months at -20.2 points compared to -24.1 points last month. This comes amid a continuous improvement in the high weighted sectors, particularly trade and industry, as the former notably picked up (from -16.9 to -13.7 points) and the later increased (from -4.4 to -4.0 points). Moreover, the agriculture index rose (from -1.5 to -0.5 points) followed by the increase in the transport and storage index (from -0.7 to -0.5 points). Conversely, the construction index fell (from -0.5 to -1.2 points) followed by the decline in the renewable energy (from 0.0 to -0.1 points), while the communication index stabilized at -0.2 points.
It is worth noting that the Gazan index has always registered negative values since the PMA start calculating the extended indices (since January 2017), which reflect the adverse long-lasting political and economic conditions in the Strip. However, the production level seemed to be less harmed in this August compared to the previous period as indicated by firms’ owners, in addition to their better expectations on production and employment in the near future.
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 maximum value of the index 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.