Companies Survey, 2nd quarter, 2007

20/08/2007
All Press Releases In Subject:
The Economy and Economic Activity

Companies Survey, 2nd quarter, 2007

Overview:

Reports from companies for the second quarter of 2007 indicate that the rise in economic activity persisted, and expectations in all industries point to further expansion in the next quarter. The rise in economic activity in the quarter occurred mainly in the manufacturing, commerce, transport, and service industries. There was a moderate increase in activity in the construction and the hotel industries, and various indicators show that there was no significant rise in either of them. The leading index of the business sector and expectations in industries overall point to a continued rise in activity in the next quarter. In construction, on the other hand, no clear picture emerged: expectations continue to be positive, but the probability of a slowdown in the next quarter rose. In manufacturing, rises in output were recorded, reflecting increased export and domestic sales. Increases in domestic and even more so in export orders for the next quarter continued. In commerce the upward sales trend continued, and companies expected sales to accelerate in the next quarter. Business services companies reported a rise in revenue, reflected mainly sales in Israel, and to a lesser extent sales of services abroad. Orders are expected to increase in the next quarter. In the hotels industry there was a rise in activity compared to the second quarter of 2006, the first time an increased has been recorded since the crisis in the industry sparked by
the Second Lebanon War in the summer of 2006. Nevertheless, the number of foreign tourists’ and Israelis’ bed nights was lower than in the second quarter of 2006. Activity is expected to rise in the next quarter, and the severity of the demand constraint continued to ease. Activity in transport and communications increased: activity in air and overland transport rose, while in sea transport and communications it fell. Orders for the following quarter indicate a further rise in activity. In construction the level of activity showed a modest rise, with infrastructure construction leading the field, and slight falls in the construction of buildings and a decline in
the number of building starts. Reports on the severity of constraints on activity showed that on the demand side these had eased compared with the previous quarter, especially in the construction, transport and hotels industries. On the other hand, the severity of the supply constraints in most industries rose slightly. Average inflation expectations to twelve months ahead rose to 2 percent, with a very small increase in the share of companies that expect inflation to exceed the target range. Companies expect, on average, an exchange rate of NIS 4.44 to the dollar twelve months hence compared with expectations of NIS 4.36 in the previous quarterly survey.

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