The PMA Business Cycle Index (PMABCI) – September 2020

Relative Improvement in the West Bank and notable slip in Gaza Strip

The results of PMA Business Cycle Index (PMABCI) revealed that the overall index has resumed declining this month, sliding to around -40.3 points compared to -35.9 points in the previous month due to the significant decline in Gaza Strip’s index, despite the relative increase in the West Bank. Moreover, the overall index is still below the pre-coronavirus crisis levels and the corresponding level of the last year.

In the Northern Governorates (West Bank), the index picked up to -31.4 points compared to -34.5 points in last August. This was resulted from increases in some sectoral indices, headed by the rise in the agriculture index (from -5.4 to 0.0 points) and followed by lesser improvements in the manufacturing index (from -8.3 to -7.5 points) and the transport and storage index (from -3.3 to -1.8 points). Meanwhile, the renewable energy index has barely grown, registering -0.1 points. Conversely, the trade index resumed declining (from around -17.1 to -19.8 points), followed by slight falls in the indices of construction (from around -1.1 to -1.6 points), and IT and communication (from -0.2 to -0.4 points).

In general, the surveyed firm owners in the Northern Governorates indicated an improvement in production levels during the month. However, it was not accompanied with a similar rise in sales. At the same time, the surveyed firms showed some optimism about the near future, expecting higher production in the three coming months.

Meanwhile, the Southern Governorates (Gaza Strip) experienced a series of economic closure and tightening the containment measures since the end of August in the wake of increasing coronavirus cases. These measures have cast its heavy shadows on the overall economic performance, pushing the business cycle indicator to its lowest at -61.5 points compared to -39.2 points in last August. In details, most sectoral indices have fallen except for agriculture which index grew from -5.4 to -0.5 points as its activities were not so affected by closure. However, the trade index has significantly dropped from nearby -31.1 to -47.9 points due to closing border-crossings and hence the flow of goods has stooped. This was followed by the slip in the indices of manufacturing (from -3.2 to -8.8 points) and transport and storage (from 1.6 to -1.6 points). Meanwhile, the remaining indices registered lesser declines, from 0.3 to -0.5 points for IT and communication, from -1.4 to -2.0 points for construction and finally from 0.0 to -0.2 points for renewable energy.

Owners of surveyed firms indicated remarkable decrease in the levels of production and sales during this month. Moreover, they expressed high pessimism about near future in terms of production and employment.

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 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.