The PMA Business Cycle Index (PMABCI) – February 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 for the second month in a row, reaching its highest level in 10 months this February at around -23.3 points compared to -27.5 points in the previous month. This was attained against the backdrop of similar performance in both the West Bank and Gaza Strip. However, the index maintained its well-below level compared to the corresponding month of 2020 (-9.8 points).

In the West Bank, the index continued its acceleration, picking up from -21.4 points in last January to -19.1 points this month, the highest since April last year. This was driven by the rises in all sectoral indices, except for the agriculture index that dropped from -0.9 points to -3.6 points. The trade index managed to register the biggest growth for the second time (from -10.4 to -7.8 points), followed by the manufacturing index that increased (from -7.5 to -6.4 points). In the meantime, the rises in the remaining sectors were lesser; (from -1.3 to -0.5 points) for the construction index, (from -0.7 to -0.5 points) for the transport and storage index, and (from –0.4 to -0.2 points) for the IT and communication index. Finally, the renewable energy index managed to grow up slightly from -0.1 to 0.0 points.

In general, the surveyed firm owners in the West Bank indicated uneven rise in the production and sales during February, resulting in some accumulation in inventory. However, they expressed higher optimism about the near future, expecting better levels for production, and to lesser extent for employment, during the three coming months.

Similarly, the index in Gaza Strip witnessed a remarkable improvement this month growing up from -42.0 points in January to -33.2 points in February, the highest since March 2020. This was resulted as most of the sub-indices have jumped up except for Agriculture index, which dropped from 0.5 points to -3.4 points. Trade index achieved an outstanding increase (from -33.7 to -24.0 points), followed by the manufacturing index growth (from -6.5 to -5.0 points). Moreover, the transport and storage index grew (from -0.2 to 0.5 points), the construction index rose (from -1.8 to -1.3 points) and IT and communication index recorded lesser increase (from -0.2 to 0.0 point). Meanwhile, the renewable energy index stayed relatively stable around its previous level at around 0.0 points.

According to the owners of the surveyed firms in Gaza, and despite the marginal declines in the production and sales, and the minor accumulation in inventory, they expressed better optimism level regarding near future. They are expecting some improvements in production and employment in the three coming months, which resulted in higher values in the economic sectors’ indices.

It is noteworthy that the extended PMABCI is a monthly index that monitors fluctuations in Palestinian economic activity in terms of 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.