The Monthly PMA Business Cycle Index (PMABCI) – May 2017

An improvement in the overall index, as it increased in the WB

The PMA has released the results of its Business Cycle Index (PMABCI) for May 2017. The results revealed a divergence between the West Bank (WB) and Gaza Strip (GS) indices through the month. GS's index widely deteriorated, while the WB's remarkably improved, pulling the overall index to increase from -7.9 points in April to around -0.4 points this month. However, it remained well below the corresponding month in 2016, when it scored 8.8 points.
The WB's index exited the negative area for the first time this year, jumping to around 14.2 points compared to -2.2 points in the previous month. This improvement came as a result of a rise in all industrial sub-sectors' indices. Those increases were headed by the furniture index from -1.3 points to 4.3 points; followed by a smaller rise in the textile index (from -0.9 points to 2.6 points), and the engineering industries index (from -2.5 points to 0.3 points); improvements in the remaining sectors were somewhat lower.
This remarkable surge was supported by higher production and sales this month, as industrial firm's owners indicated. Moreover, owners expected better production and employment levels in the coming months.
Conversely, the highly volatile index in GS deteriorated again this month, falling form -19.3 points to -38.6 points, owing to significant declines in most industrial activities' indices. Those drops included the food index (from 1.7 points to -5.1 points), the construction industries index (from -4.4 points to -9.9 points), the engineering industries index (from -5.0 points to -10.0 points), and lesser declines in the textile and the paper indices. In contrast, the indices of chemical and pharmaceutical industries, plastics, and paper have all increased, albeit in slower degrees.

It is worth noting that all indices of Gazan industrial activities (except for the food index) remained in the negative zone for the third consecutive month, while the overall index remained stuck there for more than the last three years. Those negative values reflected the adverse political and economic conditions in the Strip, the continued Israeli siege; near-complete closure of the Rafah border crossing, and prolonged delays in reconstruction efforts. In the same context, the Gazan industrial firms' owners indicated lower sales and accumulated inventories during May, and they expected even worse levels in the near future.
It is noteworthy 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.

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