Wednesday, March 30, 2016

The Melnick State of the Economy Unchanged in February 2016*

There are signs of a pause in the expansion of the business sector.
Revenues in the commerce and services continue to support economic growth.

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The Melnick State of the Economy did not change in February 2016. The Index displays signs of a halt in the expansion of economic activity in the business sector, after its moderate expansion of recent months. The industrial production index, which reflects the supply side of the business sector, fell in two consecutive months after the unusual upward correction of its level in November.  Apparently, industrial production continues to be negatively affected by the development of industrial exports due to negative global market conditions, particularly in Europe and China. The revenue in commerce and services, reflecting mainly domestic demand and private consumption, remained at a high level and its impact on the Index illustrates the effect of the increase in private consumer spending on economic growth. The imports index, which consists mainly of imports of inputs for domestic production, but also consumer goods, continues to show strong volatility with an upward positive trend. The number of employee posts in the business sector rose, reflecting strength in the labor market.

The February Index components include: a decrease of 3.7% in the index of industrial production in January, after falling 1.2% in December; an increase of 0.9% in revenue in commerce and services in January, after falling 1.1% in December; an increase of 9.5% in the imports index in February, after falling 6.3% in January, and an increase of 0.2% in the number of employee posts in the business sector in December, after rising 0.5% in November.

* The weighs of the index components were updated in 2016. The main changes are the decline in the weight of industrial production and the rise in the weight of revenue in the commerce and services.

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