Companies Survey, 2nd quarter, 2005

02/08/2005
All Press Releases In Subject:
The Economy and Economic Activity

Companies Survey, 2nd quarter, 2005

Overview:

Reports from companies for the second quarter of 2005 indicate that total economic activity continued to expand, for the sixth quarter in succession. The growth in activity encompassed most of the principal industries (with the exception of the construction industry), but expectations in the majority of industries were of a continued increase in activity, especially for exports. The leading index for the
next quarter also points to a continued rise in businesssector activity. Manufacturing output accelerated, reflecting an increase in export sales and also in sales to the domestic market. Export orders continued to rise, and orders for the domestic market for the next quarter also increased a little. Trading companies’ sales exceeded those in the previous quarter, and a further growth in sales was expected for the next quarter. Business services companies reported a continued rise in revenue deriving mainly from an increase in sales of services abroad. The number of hotel bed nights of foreign tourists and Israelis continued to rise, and activity was expected to continue growing in the next quarter. In the transport and communications secondary industries, air transport rose substantially, sea
and overland transport went up moderately, and the communications industry remained steady.. In the construction industry activity was stable, after declining over a long period; moreover, companies (especially the large ones) expect a modest increase in activity in the next quarter. Reports on the severity of constraints on the implementation of activity showed a reduction in demandside constraints in most industries (with the exception of business services). The demand constraint nonetheless remained the most effective constraint on activity in the quarter (although in the construction industry the supplyside constraint was also effective). Average inflation
expectations for the next twelve months rose to 2.4 percent, with the share of companies expecting inflation to exceed the targeted range increasing to 14 percent from 9 percent in the previous quarter. Companies expected, on average, that the exchange rate in twelve months would be NIS 4.68 to the dollar, compared with NIS 4.56 in the previous quarter's survey.

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