The level of economic activity of the business sector in December 2020 is about 3% lower than in December 2019
Continued growth in the import index indicates optimism for growth
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The Melnick State of the Israeli Economy Index rose by 0.4 percent in January 2020. The annual decline of the index in 2020 was 1.7%, which is a decrease of 3.5% per capita. According to the Index, the level of economic activity of the business sector in December 2020 is about 3% lower than that of December 2019. The rise in the Index for January mainly reflects the exit from the second lockdown and the lack of effect of the third lockdown. It seems that the population’s lack of response to the limitations of the third lockdown has allowed for the expansion of economic activity in the business sector. The most notable component for this month is the sharp rise in the number of employee posts in November, i.e., 5.1%, which was half of the decline in October – during the second lockdown – ie., 10.8%. As previously reported, the decline in employment has not prevented the continued rise in industrial production, and this may suggest that enterprises are able to continue to function, at least in the short term, with a smaller number of workers, potentially improving labor productivity. The rise of the import index, which consists mainly of inputs to domestic production, continues. This figure may indicate some optimism for the growth of activity in 2021, given the successful operation of vaccination.
The components of the January index include: a 0.5% increase in the industrial production index in December, after a 1.2% increase in November; a 0.2% increase in revenue from commerce and services in December after a 5.5% increase in November; an increase of 0.7% in the import index in January, after an increase of 3.1% in December and a 5.1% increase in the number of employee posts in the business sector in November, after a decrease of 10.8% in October.
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