The Bank of Israel's Composite State of the Economy Index for June remained virtually unchanged, indicating stability of the economy in June, contrary to previous months, when the Index declined. The Index stabilized at a low level, due to the sharp declines during the first wave of the COVID-19 pandemic between March and May (Table 1). In view of the uniqueness of the crisis, the intensity of the changes in the Index should not be indicative of the precise intensity of the changes in activity.  This is particularly true regarding the relative intensity between the various months.  This is because final data for some of the indicators are published with a lag, and affect the publication of the Index trend.[1] With the cancellation of most closures and restrictions in the second half of April and during May, activity in most industries began to increase, and a return to proper economic activity began.  This change is reflected most strongly in the Retail Trade Revenue Index: After a sharp increase in May, its level was just 5 percent lower than it was in February, before the outbreak of COVID-19 in Israel.  The change was also seen in the revision of the Composite Index for May, which shows that the economy continued to contract in May but at a significantly slower pace than in April.

The increase in the Index reflects increases in most components in May.  In addition to the Retail Trade Revenue Index, there were also significant increases in the Services Revenue Index, the Industrial Production Index, and services exports.  It also reflects increases in June in most components reported thus far, including continued recovery of the job vacancy rate from its sharp decline at the height of the crisis, and an increase in consumer goods imports following declines between January and May, a signal of the start of a recovery in private consumption.  Alongside these, the accumulated negative impact of the various indicators on the trend of the Index between March and April moderated its increase.  Table 2 presents the development of components of the Index in the past few months.​

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

 

 

Table 1: Revisions in the Composite Index

Revision

Previous data

New data

June 2020

 

0.03

May 2020

-1.80

-0.62

April 2020

-1.56

-1.70

March 202

-0.66

-0.74

 

Table 2: Changes in the Index components in recent months♦

(monthly percent change, unless otherwise noted)

 

June

2020

May

2020

April

2020

March 2019

Industrial Production Index

(excluding mining and quarrying)1

 

7.2

-9.9

-8.7

Services Revenue Index

(excluding education and public administration) 1

 

4.4

-7.9

-17.8

Retail Trade Revenue Index1

 

25.7

-17.2

-9.6

Imports of consumer goods2

8.3

-0.6

-5.8

-6.8

Imports of manufacturing inputs

(excluding fuels)

2.2

-9.9

6.2

-1.0

Goods exports (excluding agriculture) 2

-4.7

13.0

3.1

-20.2

Services exports (excluding transportation) 3

 

6.0

-6.5

-8.2

Number of employee posts in the private sector

 

 

-27.9

-3.2

Job vacancy rate in the business sector4

2.2

2.0

1.3

1.8

Building starts5

 

 

 

-10.5

 

♦ Since the Central Bureau of Statistics did not calculate seasonally adjusted series for some of the variables, there may be inconsistencies between some of the variables appearing the Composite Index tables and Central Bureau of Statistics publications.

 

1 Since the Central Bureau of Statistics did not calculate seasonal adjustments for March–May, Industrial Production and revenue data for those months were calculated on the basis of projected seasonality for those months.

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

3 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.  Since the Central Bureau of Statistics did not calculate seasonal adjustments for March–May for data on the export of tourism services, services exports data for March–May are the sum of other business services exports seasonally adjusted and tourism services exports using original data.

4 The job vacancy rate is calculated out of the total number of employed people and vacancies and is included in the index at its level.  Sine the Central Bureau of Statistics did not calculate seasonal adjustments for March–June, the data for those months are not seasonally adjusted.

5 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).

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[1] In view of the major changes in business activity as a result of the pandemic, from February onward, the pace of the trend has been calculated on the bases of a regime switching model that is added to the regular model based on a Kalman Filter.​