The extended PMA Business Cycle Index (extended PMABCI) – October 2018

Decline in the West Bank and slight improvement in Gaza Strip

The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for October 2018. The results revealedthat the overall index fell during October due to the declinein the West Bank’s index, despite the slight improvement in Gaza Strip’s index. As such, the overall extended PMABCIdropped from -3.2 points in September to around -5.9 points in this October. However, it remained slightly higher than the index of October 2017 (-7.6 points)

In the WB, most sectors achieved better performance during October compared to the previous month. However, the notable drop in the trade sector’s index (from 3.9 to -2.3 points) pushed the overall index down to 3.7 points compared to 7.9 points in last September. The agriculture index picked up (from 2.2 to 3.6 points), followed by the transport and storage index increase (from 0.2 to 0.9 points). Meanwhile, indices of renewable energy, IT, industry and construction have all experienced minor changes, and remained close to the previous month’s levels.

Overall, the decline in the West Bank's index reflected lower sales during October that resulted in accumulated inventory, as indicated by the economic firms' owners. However, owners expressed their optimistic expectations about production in the coming three months. 

Conversely, GS index slightly improved for the second consecutive month, increasing from –29.5 points to around -28.7 points in this October. Gazan economic sectors either rose or stabilized during this month, except for the trade whose index slipped from -17.8 to around -18.4 points. However, the industry index picked up (from -6.7 to -6.1 points), followed by the increases in the indices of; construction (from -2.0 to -1.2 points), IT (from -0.2 to -0.1 points) and renewable energy (from -0.04 to 0.0 points). At the same time, indices of agriculture, and transport and storage have both stabilized at -2.0 and -0.9 points, respectively.

It is worth noting that the Gazan index register mostly negative values, which reflects the adverse long-lasting political and economic conditions in the Strip, the continued Israeli siege, and the prolonged delays in reconstruction efforts. However, production and sales during this month maintained their previous levels as indicated by Gazan firms' owners. The same is for the future expectations, as they maintained their pessimistic expectations about production and employment in the coming three 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 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.