Companies Survey, 4th quarter, 2005

02/02/2006
All Press Releases In Subject:
The Economy and Economic Activity

Companies Survey, 4th quarter, 2005

Overview:

Reports from companies for the fourth quarter of 2005 indicate that the expansion in total economic activity has now lasted for two and a half years. The growth in activity encompassed all of the principal industries except for construction. An increase in activity during the next quarter is expected in all the principal industries. The leading index in this Survey indicative of an overall growth in business-sector activity during the first quarter of 2006 as well. Increases in manufacturing output reflected mainly a growth in export sales, as well as sales to the domestic market. The growth in orders, for the domestic market in the next quarter and for exports in particular, continued. The growth in sales among trading companies continued, but at a more moderate rate than in the previous quarter. However, companies expected a larger growth in sales during the next quarter. Business services companies reported a continued rise in revenue that was reflected by increased sales of services in Israel and abroad, with the increase expected to continue in the next quarter. In the hotel industry the number of bed nights of foreign tourists continued to rise concurrent with stability in the number of bed nights of Israelis, and the expansion in activity is expected to continue in the next quarter. In the transport and communications industries, sales of services slowed overall and to nonresidents in particular as compared to the sales growth typical since the beginning of the year. Companies expect an only moderate growth in sales during the next quarter. In the construction industry the static level of activity characteristic of the industry in the previous two quarters continued. Large companies expect a growth in activity, while medium-sized and small companies expect the static level of activity to continue and even an actual decline in activity during the next quarter. Reports on the severity of constraints on the implementation of activity show that compared with the previous quarter, demand-side constraints increased slightly in most industries while a mixed trend in supply-side constraints was recorded in the industries reviewed. Overall however, the severity of supply-side constraints in most industries approximated to the level of severity of demand-side constraints. Average inflation expectations for the next 12 months) remained unchanged during the quarter and amounted to 2.6 percent. However, the share of companies expecting inflation to exceed the targeted range fell from 22 percent in the previous quarter to 18 percent in the quarter reviewed. Companies expected, on average, that the exchange rate in twelve months would be NIS 4.76 to the dollar, more than the level of NIS 4.73 in the previous quarterly survey.

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