The Findings of PMA Business Cycle Index PMABCI of February 2018

Improvement in the West Bank; drawback in Gaza Strip

PMA released the findings of PMA Business Cycle Index (PMABCI) of February 2018, which cover the usual industry sector –the findings have covered this sector since 2013, as well as six new sectors including agriculture, trade, constructions, transport and storage, telecommunications, and renewable energy. The findings of the expanded indicator of February show slight increase over previous month against the backdrop of clear improvement in the West Bank –despite the drawback in Gaza Strip. Consequently, the overall index value rose slightly from -3.1 points in January to -1.8 in February. However, the index value remained very close to that of the same month of last year, which stood at -1.6 points.

The growth in the indices of most sectors in the West Bank led to doubling the value of the overall index of the West Bank from 6.8 points to 12.4 points. The rise in the industry index from 1.1 points to 4.3 points and the rise in the agriculture index from 4.5 points to 7.2 points in January and February 2018 were behind the improvement. Additionally, there was slight increase in the constructions index from -0.2 to 0.4 points and slight increase in transport and storage index from -0.4 to 0.0. Renewable energy and telecommunications indices remained relatively constant at 0.0 point and 0.3 points, respectively. Alternatively, the trade index experienced limited downturn as it dropped from 1.0 point to -0.1 point during the period of comparison. The growth in the West Bank index is due to the increase in the levels of production and sales during this month, which comes with a better level of future expectations relative to the size of production by respondent business owners. 

On the other hand, Gaza Strip’s BCI lost more of its value as it dropped from -26.6 points last month to -35.4 this month. This is due to decline among all sectors included in the index calculation including the trade sector, which dropped from -17.8 points to -20.6 points during the period of comparison; the agriculture sector, which dropped from -0.1 points to -4.9 points; storage and transportation sector, which fell from 0.2 points to -1.2 points; constructions sector, which dropped from -0.3 to -1.6; and the telecommunications sector, which fell from -0.1 points to -0.3 points. The industry and renewable energy indices registered limited drop of -6.7 points and 0.04 points to -6.8 points and -0.04 points, respectively. 

Gaza Strip’s BCI registered negative values in most cases due to deteriorating political and economic situations there, which has been persistent throughout the years of closure. This also reflects the slow-moving reconstruction process and other aspects.

Production and sales levels dropped this month, as indicated by business owners in Gaza and slight drop in the level of future expectations for production and employment throughout the coming three months. 

PMA started this month to publish the expanded PMABCI index. This is a monthly index relative to monitoring the fluctuations of the Palestinian economic activity by watching the performance of seven economic sectors. The index specifically monitors the fluctuations in production and sales and employment. The highest value of the index is +100 points and its lowest value is -100 points. The positive value points out good economic circumstances while the negative value shows bad economic situations. A value that is close to zero means that circumstances are not moving on and that it is unlikely that they are going to improve soon.