The Composite State of the Economy Index for May 2021 increased by 0.24 percent, similar to its long-term trend

The Bank of Israel's Composite State of the Economy Index for May increased by 0.24 percent, similar to the Index’s long-term trend, in view of the continued expansion of economic activity following the cancellation of COVID-19 restrictions (Table 1). As a reflection of the continued broad reopening of businesses (other than the incoming tourism industry), the job vacancy rate remained at its record high in May for the third consecutive month.[1]  The May index only partially reflects the potential effects of Operation Guardian of the Walls on economic activity, since most of the data for compiling the index are obtained at a lag.  The overall index figures for January and February were revised downward, while the figures for March and April were revised upward (Table 1) due to data revisions in the index components.

 

Beyond the job vacancy rate, the Composite Index for May was positively affected by increases in the import of consumer goods (May), the import of manufacturing inputs (May), the services revenue index (April), the retail trade revenue index (April), and employee posts (March). In contrast, goods exports (May), the Industrial Production index (April), services exports (March), and building starts (March) declined, which had a negative impact on the index. Table 2 presents the development of components of the Index in the past few months.

 

In view of the uniqueness of the crisis and the resulting measurement difficulties, the changes in the Index should not be used as an indicator of the precise intensity of changes in economic activity, and particularly not regarding the relative intensity between various months.

 

  

Table 1: Revisions in the Composite Index

Revision

Previous figure

New figure

May

 

0.24

April

0.25

0.34

March

0.37

0.45

February

0.44

0.29

January 2021

-0.35

-0.57

December 2020

0.61

0.61

 

 

 

 

Table 2: Changes in the Index components in recent months

(monthly percent change, unless otherwise noted)

 

May 2021

April 2021

March 2021

February 2021

Industrial Production Index

(excluding mining and quarrying)

 

-1.2

3.1

-1.5

Services Revenue Index

(excluding education and public administration)

 

2.4

5.0

3.0

Retail Trade Revenue Index

 

2.5

2.2

6.4

Imports of consumer goods1

0.2

4.2

3.9

3.4

Imports of manufacturing inputs

(excluding fuels)1

4.3

-2.2

2.6

-2.9

Goods exports (excluding agriculture)1

-7.5

7.2

7.9

-4.6

Services exports (excluding transportation)2

 

 

-1.6

1.2

Number of employee posts in the private sector

 

 

3.7

4.8

Job vacancy rate in the business sector3

4.9

4.9

4.6

2.9

Building starts4

 

 

-15.5

 

 

1 Goods imports and exports are calculated in fixed prices (adjusted for changes in foreign trade price indices).

2 Services exports are calculated in real terms using the Consumer Price Index, and are comprised of the export of other business services and the export of tourism services.

3 The job vacancy rate is calculated out of the total number of employed people, and is included in the index at its seasonally adjusted level.  The figures for March and April are not seasonally adjusted, since the Central Bureau of Statistics did not calculate a seasonal adjustment for those months due to the exceptional change in the figure.

4 Since the Central Bureau of Statistics publishes data on building starts once per quarter, the data integrated into the model are at a monthly frequency based on additional sources, such that the distribution is consistent with the quarterly data published by the Central Bureau of Statistics (in percent, seasonally adjusted).

 

 

 

Detailed explanations regarding how the Composite Index is calculated, as well as detailed long-term tables, can be found at

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

 



[1] The job vacancy rate figures for March and April are not seasonally adjusted, since the Central Bureau of Statistics did not calculate a seasonal adjustment for these months due to the exceptional change in this figure.​