The extended PMA Business Cycle Index (extended PMABCI) – September 2019 Drop in the West Bank and Gaza Strip

The PMA has released the results of its extended Business Cycle Index (extended PMABCI) for September 2019. The results showed that the overall index has declined against the backdrop of fall in both the West Bank and Gaza Strip. Moreover, the overall index is maintaining a negative value for the sixth consecutive month in light of current public budget crisis. It registered around -16.5 points in this September compared to -13.9 points in the previous month, and remained lower than its corresponding level of the last year (about -3.2 points).

Looking at the WB’s index, it slipped from about -11.3 points in last August to around -13.5 points this month due to falls in the indices of industry, construction, trade and communications. The industry index witnessed the biggest change as its index slipped (from -5.4 to -6.8 points), followed by fall in the trade index (from -5.4 to -5.8 points), the construction index (from -0.7 to -1.0 points) and the decline in the communication index (from -0.2 to -0.4 points). Conversely, the indices of the remaining sectors (agriculture, renewable energy, and storage and transport) have all maintained the previous values at 0.0 points, -0.1 points and 0.5 points, respectively.

In general, the surveyed firm owners indicated a decline in production and sales during the previous period, in addition to remarkably lower expectations on future production and employment during the coming three months.

Meanwhile, Gazan index failed to maintain the previous gradual improvement, declining from its best in about 30 months (-20.2 points in August), to register -23.4 points this month. This resulted from the fall in the high weighted sectors, particularly trade and industry, in addition to drop in agriculture. The trade index has notably declined from -13.8 points to -17.8 points, the industry index fell to -4.2 points compared to -4.0 points in last August, while the agriculture index slightly decreased from -0.5 to -1.0 points. Conversely, the remaining sectors scored slight improvements, headed by the construction whose index picked up from -1.2 to -0.5 points. Meanwhile, storage and transport index increased (from -0.5 to 0.0 points), renewable energy rose (from -0.1 to 0.1 points) and the communication index improved (from -0.2 to -0.1 points).

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It is worth noting that the Gazan index has always registered negative values since the PMA started calculating the extended indices (since January 2017), which reflect the adverse long-lasting political and economic conditions in the Strip. Moreover, this September experienced remarkably lower production level as indicated by firms’ owners, in addition to lower expectations on production and employment in the near future.

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 and employment levels). The maximum value of the index 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.

Source: Palestinian Monetary Authority