The business sector expansion continues

Private consumption seems to be a major factor in the expansion of the business sector

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The Melnick State of the Israeli Economy Index rose by 0.4 percent in in March 2022. The expansion of the business sector continues. Apparently, the significant withdrawal of the epidemic has created increased economic activity that compensates for the past decline in activity due to limitations stemming from the epidemic. There was a significant increase in revenue in commerce and services – reflecting domestic demand, and especially private consumption. It appears that private consumption is a major factor in the expansion of the business sector. The industrial production index, which reflects the supply side of the business sector, continues to expand, and fits well with the expansion of the business sector. The import index, which consists mainly of inputs to domestic production, has been declining in the last two months. Despite its decline, its level remains high and in the short term does not constitute a constraint on economic growth. The momentum of increase in the number of employee posts in the business sector has stopped, but at this stage it should not be seen as evidence of weakness in the labor market.

The components of the March index include: a 1.1% increase in the industrial production index in February, after a 1.1% increase in January; a 2.6% increase in revenue from commerce and services in February following a 1.9% increase in January; a decrease of 1.1% in the import index in March, after a decrease of 2.5% in February and a decrease of 1.2% in the number of employee posts in the business sector in January, after an increase of 0.4% in December.

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