The Bank of Israel's Composite State of the Economy Index

The Composite State of the Economy Index is a synthetic indicator for examining the direction of the development of real economic activity, in real time. It is calculated based on 12 different indicators: the industrial production index; the retail trade revenue index; the services revenue index; consumer goods imports; imports of manufacturing inputs; goods exports; services exports; the number of employee posts in the private sector; the job vacancy rate, the number of building starts, electricity consumption, and credit card purchases.

The Index is calculated by the Bank of Israel's Research Department once a month, close to the date that the Industrial Production Index is published by the Central Bureau of Statistics.

The Composite Index is made up of two elements: (1) the long-term growth rate of business sector product (which changes slowly over time); and (2) the short-term common dynamic of the Index components compiled in terms of standard deviations. The parameters of the model are estimated at mixed (monthly and quarterly) frequency through a Kalman filter and are updated on an ongoing basis.