Companies Survey, 1st quarter, 2011

12/05/2011
All Press Releases In Subject:
The Economy and Economic Activity

Companies Survey, 1st quarter, 2011

Overview:

Reports from companies show that economic activity in the first quarter of 2011 continued to expand at a similar rate to that of the previous quarter. This expansion, which was reflected in a rise in the net weighted balance of the business sector, encompassed most industries, except for trading, which showed a slowdown in activity. The leading index expects a continuation of expansion of activity in the next quarter. Also, in nearly all industries no growth was recorded in the severity of demand constraints for implementing the planned actions.
The net balance in manufacturing grew at a moderate rate relative to the previous quarter, as emerges from sales data in Israel and abroad, which was in line with expectations from the previous quarter. The slowdown in activity was reflected in a slowdown in the inventory of products, and not in the rate of utilization of machinery and equipment, or the net balance of the change in the number of employees, which continued to grow at a similar rate to that of the previous quarter. Companies reported continuing growth in orders for the next quarter. The volume of activity in trading companies grew slightly following increases in the previous quarters. At the same time, the companies expect a significant increase in sales in the second quarter of 2011. Business services companies reported an increase in activity, a continuation of the trend from the beginning of the year, but moderately relative to the previous quarter in general, and to sales of services abroad in particular. Companies do however expect a sharp growth in activity in the next quarter in view of the volume of orders both from abroad and locally. In this quarter as well, hotels reported an increase in activity relative to the same quarter last year, despite the increase in the severity of demand constraints in the industry connected to the companies' more pessimistic assessment of the security situation in Israel relative to the previous quarter. Transport and communications activity continued to grow, albeit more moderately than the previous quarter. The source of the growth is a rise in the net balance of sales to Israelis. Expectations are of more rapid activity in the next quarter. Construction activity grew in the review quarter. Even though infrastructure construction showed a slowdown, building construction activity expanded. Expectations of activity in the industry for the next quarter are optimistic. Average inflation expectations for the next 12 months are beyond the upper limit of the price-stability target, and stand at 3.08 percent, as against 2.65 percent in the previous quarter. Companies expect the exchange rate in twelve months time to be NIS 3.71 to the dollar, as against NIS 3.78 to the dollar forecast in the previous survey. The average exchange rate on the day of reporting was NIS 3.51 to the dollar.

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