The rise in the index reflects a halt in the decline in business sector activityAccording to a conservative estimate, Israel's business GDP decline in 2020 stands at 4.5 percent
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The Melnick State of the Israeli Economy Index rose by 1.1 percent in July 2020. The rise in the Index reflects a halt to the decline in business sector activity. The release of the closure and the return of some workers to the workplace led to a halt to the deterioration and a renewal of the increase in activity, although this remains at a very low level. It turns out that releasing the closure alone was not enough to rehabilitate the activity as long as there is no solution to the presence of the pandemic. The level of revenue in commerce and services, which reflects domestic demand and especially private consumption, in June is 6.2 percent lower than its level in February. The adjustment lag in the number of employee jobs is noticeable, although this figure is published with a lag of two months. According to a conservative estimate based on the stabilization of economic activity by the end of 2020 at the level of July, the annual decline of Israel's business GDP in 2020 may be estimated at ~4.5 percent, and the business GDP decline per capita at ~ 6.2 percent.
Important statistical note: Due to measurement difficulties, the CBS did not publish seasonally adjusted data (for March to June) for the industrial production index and 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 July Index include: an increase of 10.1% in the industrial production index in June, after an increase of 16.6% in May; a 5.4% increase in revenue in commerce and services in June after a 9.6% increase in May; an increase of 3.3% in the import index in July, after an increase of 4.3% in June and a 14.6% increase in the number of employee posts in the business sector in May, after a decrease of 28.2% in April.
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