The Composite State of the Economy Index for December 2018 increased by 0.2 percent

The Composite State of the Economy Index for December 2018 increased by 0.2 percent: The economy’s average rate of expansion declined in 2018 to around the long-term growth rate

 

The Bank of Israel's Composite State of the Economy Index for December 2018 increased by approximately 0.2 percent, attesting to continued expansion of the economy at the long-term growth rate. The Index was positively impacted by the increase in consumer goods imports and by the increase in the job vacancy rate in December, as well as by increases in retail trade revenue and in services revenue in November. In contrast, the declines in the import of manufacturing inputs in December and the decline in industrial production in November moderated the Index’s rate of growth this month. The Index readings for previous months were revised downward, due in part to the downward revision in the job vacancy rate for October and November (Table 1). Table 2 presents the development of components of the Index in the past few months.

 

The Composite State of the Economy Index increased by 3.1 percent in 2018 relative to 2017, similar to the GDP growth rate.  The decline in the growth rate of the index compared to the rate the previous year (4.2 percent) reflects the economy’s difficulty in increasing the volume of production through an increase in the number of workers, since the unemployment rate is low and the economy needs to provide a larger share of the demand from outside sources. The development of the components of the index (Figure 1) is in line with this view: The rate of increase in employee posts decline to 1.5 percent in 2018, similar to the growth rate of the primary working-age population (compared with 2 percent in 2017), while the import components increased more rapidly this year than in the previous year.

 

 

Table 1: Revisions in the Composite Index

Revision	Previous data	New data
December 2018		0.24
November 2018	0.32	0.26
October 2018	0.30	0.28
September 2018	0.21	0.18

 

 

Table 2: Changes in the Index components in recent months

(monthly percent change, unless otherwise noted)

	December 2018	November 2018	October 2018	September 2018
Industrial Production Index (excluding mining and quarrying)		-2.6	0.2	-3.3
Services Revenue Index (excluding education and public administration)		1.2	0.7	-0.6
Retail Trade Revenue Index		0.4	1.0	-0.3
Imports of consumer goods1	-0.1	5.7	0.7	-3.1
Imports of manufacturing inputs (excluding fuels)1	-3.5	5.7	1.4	0.3
Goods exports (excluding agriculture) 1	1.8	-3.7	1.3	-7.6
Services exports (excluding transportation) 1			2.4	-5.2
Number of employee posts in the private sector			0.5	-0.3
Rate of vacant employee posts out of total number of employed people in the business sector2	3.7	3.6	3.8	3.8
Building starts3				-1.6

¹ Foreign trade indices are quantitative (in contrast to CBS monthly foreign trade indices).

² The job vacancy rate is included in the Index at its level, seasonally adjusted and smoothed.

³ A

s the Central Bureau of Statistics ceased publishing monthly data on building starts, since July 2016 the calculation of the building starts component in the Composite Index has changed. The Component is calculated at a quarterly frequency and the change (in percent, seasonally adjusted) is attributed to the last month of the quarter for which it is published.

 

 

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http://www.boi.org.il/en/Research/Pages/ind.aspx