The Monthly PMA Business Cycle Index (PMABCI) – September 2015
The index improved noticeably in both the West Bank and Gaza
The PMA has released the results of its Business Cycle Index (PMABCI) for September 2015. These showed that the overall PMABCI has notably improved from 6.6 points during August to around 13.2 points this month, mainly due to improvement in economic activity in the West Bank (WB), and the abatement of contraction in Gaza Strip (GS). Data also showed a much higher overall index in September than in the corresponding month in 2014, during the Israeli war on GS, when the index shrank to its lowest level ever (-36.1 points).
In the WB, the index has further improved from 13.2 points during August to around 17.2 points during this month, reflecting progress in most industrial sub-sectors, particularly furniture (from -2.8 points to 3.6 points), and engineering (from -1.1 points to around 5.4 points). However, the indices for food and textile sub-sectors have declined during the same period.
The improvement of the WB index for the second consecutive month reflected higher current and future production, spurred by a positive short-term outlook for higher production and employment levels in coming months.
In GS, the index has witnessed an improvement as contraction abated during the month to around -2.1 points compared to -15.3 points in the previous month. Except for a slight decrease in chemical activities, all industrial sub-sectors have improved during this month. In particular, the textiles index increased from -2.3 points to around 4.6 points, while the food index rose from -6.2 points to -2.1 points.
Gazan industrial sector's production and sales soared this month compared to previous months, mainly reflecting heightened activity in the preparation for "Eid al-Adha". Thus firms owners' pessimism about the near future has declined during September. However, Gazan industries continued to encounter numerous obstacles, including deficiencies in raw materials, shortages in electricity and fuel supplies, and prolonged delays in reconstruction efforts, in lifting the Israeli blockade, and in opening the 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.