The Bank of Israel's Composite State of the Economy Index for December 2014 increased by 0.3 percent. The Index was positively impacted by an increase in the import of consumer goods[1], and by an increase in the other foreign trade indices for December. The rate of job vacancies continued its consistent increase since September, and also contributed to the pace of increase of the Index. The Industrial Production Index and the services revenue index for November moderated the increase in the Index. The pace of growth in previous months was revised slightly upward (Table 1), mainly due to an upward revision in the foreign trade indices for those months. Table 2 presents the development of components of the Index in the past few months.
Summarizing 2014, the Composite Index (annual average) increased by 2.1 percent, following growth of 3.4 percent in the previous year. The slowdown in the pace of growth of the Composite Index is consistent with the slowdown in the business product growth rate from 3.4 percent in 2013 to 2.5 percent in 2014[2]. The main contributing factors to the slowdown in the pace of growth of the Index in 2014 were the decline in building starts, the slowdown in the growth rate of the trade revenue and services revenue indices, and the slight slowdown in goods exports. During the year, the monthly pace of growth of the Index slowed to the point of a standstill in some months (due among other things to Operation Protective Edge), while it returned to more rapid growth in recent months.
Table 1: Revisions in the Composite Index
Revision |
Previous data |
New data |
December |
0.28 | |
November |
0.14 |
0.18 |
October |
0.12 |
0.16 |
September |
0.16 |
0.25 |
Table 2: Changes in the Index components in recent months
(Monthly percent change, unless otherwise noted)
December |
November |
October |
September | |
Industrial Production Index (excluding mining and quarrying) |
-0.8 |
-2.2 |
1.1 | |
Services Revenue Index (excluding finance, education, and public administration) |
-1.8 |
0.6 |
1.3 | |
Trade Revenue Index |
0.0 |
-1.4 |
4.5 | |
Imports of consumer goods3 |
22.4 |
-1.9 |
2.2 |
-5.8 |
Imports of manufacturing inputs (excluding fuels)3 |
10.3 |
-0.8 |
-1.7 |
0.2 |
Goods exports (excluding agriculture) 3 |
2.0 |
-0.7 |
2.4 |
6.6 |
Services exports (excluding transportation) 3 |
3.5 |
-2.1 |
0.4 |
9.1 |
Number of employee posts in the private sector |
0.4 |
0.9 | ||
Rate of vacant employee posts out of total number of employed people in the business sector1 |
2.88 |
2.82 |
2.74 |
2.65 |
Building starts2 |
-1.8 |
1.0 |
1 The rate of job vacancies at its actual level, seasonally adjusted and smoothed.
2 Six-month moving average.
3 Foreign trade indices are quantitative (in contrast to CBS monthly foreign trade indices).
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[1] As a result of a sharp increase in vehicle purchases, the result of bringing purchases forward to December following the notice from the Ministry of Transportation that the “Green taxation” rules would become more stringent as of January 2015. The method of calculating the Composite Index limits the effect of outlier values, so the Index value is not materially different from what it would have been excluding the jump in vehicle purchases.
[2] According to the Central Bureau of Statistics annual estimate.