There are signs of improving labor productivity on the one hand,and rising unemployment on the other.
The rise in the import index indicates optimism for the increase in economic activity
::: Download Index Data in Excel Format :::
Click To Enlarge
The Melnick State of the Israeli Economy Index rose by 0.2 percent in December 2020. The rise in the Index mainly reflects the exit from the second lockdown. As previously reported, the impact of the second lockdown on economic activity was more moderate than that of the first lockdown. The most notable figure we report this month is the sharp decline in employee posts in the business sector in October, about 10.6 percent during the second lockdown. The data show that the decline in employment is much sharper than the decline in industrial production. This may imply that enterprises are able to continue to function, at least in the short term, with a smaller number of workers. The positive aspect of this development is the potential improvement in labor productivity, which is lower in Israel compared to other OECD countries, but the negative aspect is an increase in the unemployment rate, which becomes the most difficult problem for the economy also in the longer term. The import index, which consists mainly of inputs for domestic production, rose by almost 10 percent in November and December; it is possible that this figure indicates cautious optimism for an increase in economic activity in 2021 with expectations for the successful vaccination of the population.
The components of the December index include: a 1.1% increase in the industrial production index in November, after a decrease of 0.5% in October; a 5.1% increase in revenue from commerce and trade in November after a decrease of 0.9% in October; an increase of 5.2% in the import index in December, after an increase of 4.3% in November and a decrease of 10.6% in the number of employee posts in the business sector in October, after an increase of 1.0% in September.
Click To Enlarge
Click To Enlarge