The PMA Business Cycle Index (PMABCI) – August 2020

Some Improvement in the West Bank and Gaza Strip

The results of PMA Business Cycle Index (PMABCI) revealed that the overall index managed to recover this month, increasing to around -35.9 points compared to -45.7 points in the previous month. This comes due to the relaxation of closure measures that was imposed in previous July to fight the second wave of Corona virus spread. However, the overall index is still below the pre-corona crisis levels.

In the Northern Governorates (West Bank), its index picked up to -34.5 points compared to -43.7 points in last July. This was resulted from increases in most sectoral indices, except the shrink of manufacturing index (from -7.4 to -8.3 points). The trade index rose (from -22.4 to -17.1 points), followed by improvements in the indices of agriculture (from -8.5 to -5.4 points), construction (from -2.0 to -1.1 points), and IT and communication (from -0.7 to around -0.2 points). Meanwhile, indices of transport and storage, and renewable energy have relatively maintained their previous levels at -2.5 points and -0.1 points, respectively.

In general, the surveyed firm owners in the Northern Governorates indicated an improvement in production and sales levels during the month. This has prompted them to improve their future expectations, represented by a decrease in the level of pessimism about the future production and employment.

Likewise, Southern Governorates index also experienced some improvements, by growing from -50.5 in last July to around -39.2 this August, incurred by the rises in indices of all surveyed economic activities, albeit at varying degrees. The highest increase was observed in the transport and storage index (from -1.4 to 1.6 points), followed by the growth in the manufacturing index (from -5.8 to -3.2 points) and the trade index (from       -33.5 to -31.1 points). Moreover, the agriculture index recovered (from -7.4 to -5.4 point) along with indices of IT and communication (from -0.4 to 0.3 points) and the construction (from -2.0 to -1.4 points). At the same time, the renewable energy index has slightly grown from around -0.1 to 0.0 points.

Owners of surveyed firms indicated an improvement in the levels of production and sales during this month. Moreover, they expressed cautious optimism about near future in terms of production and employment. Despite the improvement in economic activities this month, Northern Governorates are still suffering from the blockade and deteriorating economic conditions, as has been the case for years.

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.