PMA Announces the Results of November PMABCI

Increase in the West Bank and remarkable contraction in Gaza Strip

The PMA has released the results of PMA Business Cycle indicator (PMABCI) for November 2013. The PMABCI is a monthly index which aims to capture the state and evolution of the Palestinian business environment, reflecting fluctuations in production and economic activity overtime. The construction of the indicator is based on qualitative data obtained from monthly business surveys of a representative sample of industrial institutions’ owners/ mangers on the value of various leading indicators during a specified period, and their expectations for the coming months. After that, the data is processed to construct a quantitative PMABCI.

During November 2013, the PMABCI witnessed a relative improvement, increasing from -0.6 in October to 1.44 in November. Despite that this improvement is considered to be subdued, it is the best value for the indicator since June 2013, and it comes as a result of the increase in the West Bank (WB) indicator, despite the notable decrease in Gaza Strip (GS) indicator, in the same period.

The WB indicator increased from -2.19 in October to 1.56 in November, which comes basically as a result of the improved performance for all sectors, except for the textile and furniture sectors. Although these two sectors form around 36 percent of the WB labor force, the contraction in their performances weren't big enough to offset the WB indicator growth trend. It is worth mentioning that the overall industry in the WB has recorded a good performance during the previous three months, as the data indicates. However, data also indicates that the industrial firms are pessimistic about the near future, due to the unclear prospects of the WB economy under the doubt of achieving progress in the Palestinian-Israeli ongoing negotiations, and the possibility of deterioration in the security conditions, as a result of that. 

While in GS, the indicator has witnessed a remarkable contraction during November, when it declined to -5.54 compared with 6.34 in October. This contraction is basically due to the decline in construction sector that forms around 15 percent of GS labor force, along with other declines in paper industry, chemical  and pharmaceutical industries, and engineering industry. On the other hand, the other industries maintained their previous levels. It is worth mentioning that GS still faces the same political conditions of the Israeli siege and political schism. However, the dominant factor in this stage is the continued political unrest in Egypt and its impact on Gazan economy that is highly dependent on the Egyptian economy, especially through the movement of individuals and goods both ways. And despite the good performance during the previous months, data indicates that the probability of future deterioration in the economic and security conditions has harmed the indicator of November.

It is important to notice that the maximum value of this indicator is positive 100, while the minimum is minus 100; a positive value indicates favorable economic performance, and the bigger this value, the better the economy is. But if the value is negative, then economic performance is worsening the closer it gets to minus 100. 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.

Source: PMA (2013). PMABCI, November, 2013.