Wednesday, October 28, 2020

The Melnick State of the Economy Index Rose by 0.5 Percent in September

The second lockdown will lead to a sharp decline in economic activity

It may be estimated that the decline in business output in 2020 will be 8.5% 

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The Melnick State of the Israeli Economy Index rose by 0.5 percent in September 2020. The rise in the Index reflects a slight recovery in the activity of the business sector in the summer months before the lockdown was announced at the end of September. Despite the recovery, the level of activity remained at a very low level. It turns out that the release of the lockdown alone is not enough to rehabilitate economic activity, if there is no solution to the presence of the pandemic. The second lockdown will lead to a sharp decline in economic activity. The initial effect of the second lockdown will be partially reflected in the October Index and the fuller effects in the November and December.

 Assuming the decline in the indices, by the end of the year, will be similar to that which occurred during the first lockdown, it may be estimated that the decline in business output, in 2020, will be 8.5%.

 The components of the September Index include: a 0.6% increase in the industrial production index in August, after a decrease of 3.3% in July; a 0.7% increase in revenue from commerce and services in August after a 1.4% increase in July; an increase of 5.4% in the import index in September, after an increase of 1.3% in August and an increase of 0.1% in the number of employee posts in the business sector in July, after an increase of 11.7% in June.

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Tuesday, September 29, 2020

The Melnick State of the Economy Index Rose by 0.6 Percent in August

                        The rise in the Index reflects a slight recovery in the business sector activity.

The recovery will be abruptly stopped due to the lockdown announced.

 Click graph to enlarge


The Melnick State of the Israeli Economy Index rose by 0.6 percent in August 2020. The rise in the Index reflects the slight recovery that occurred in the business sector activity with the release of the closure and the partial return of workers to their jobs. Despite the recovery, the level of activity remains at a very low level. It turns out that as long as there is no solution to the pandemic, the release of the closure alone is not enough to rehabilitate the economic activity. There is no doubt that the closure announced in the second half of September will sharply interrupt the recovery, and economic activity can be expected to slow down even beyond the decline of the first closure.

Important statistical note: Due to measurement difficulties, the CBS did not publish seasonally adjusted data (for March to July) for some of the revenue in the commerce and services sectors. The data we use for the above indicators are calculated on the basis of the original data, without seasonal adjustment, and on seasonal coefficients of the last three years; hence, they may change when the CBS publishes official data.

 The components of the August index include: a decrease of 3.2% in the industrial production index in July, after an increase of 2.4% in June; a 1.3% increase in revenue in commerce services in July after a 5.8% increase in June; a decrease of 1.4% in the import index in August, after an increase of 2.8% in July and, an increase of 11.4% in the number of employee posts in the business sector in the month of June, after an increase of 15.1% in May.

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