Purchasing Managers Index still indicates contraction

The index rose in July, but remains below the critical 50-point level.

The Israel Purchasing Managers Index, compiled by Bank Hapoalim and the Israel Purchasing and Logistics Managers Association, rose by 1.6 points to 47.6 points in July 2013. However, the index still shows that the economy is contracting, staying below the 50-point dividing line between economic expansion and contraction.

The export demand component indicated expansion in July, after two months of contraction. However, the domestic demand component fell again in July, indicating contraction for the fourth consecutive month.

The JPMorgan Global Purchasing Managers Index rose again in July to 50.8 points. The US Purchasing Managers Index continued to improve, reaching 55.4 points, its highest level since April 2011. The Eurozone Purchasing Managers Index rose to 50.5 points, its highest level in two years, due to the recovery in the zone's four largest economies, led by Germany. The UK Purchasing Managers Index rose, but the indices for Japan and emerging markets had the sharpest falls in four years, dropping below 50 points.

Bank Hapoalim says that the Purchasing Managers Index has been below the 50-point level for three months, indicating a contraction of industrial activity. In July, there was improvement in export demand to again indicate expansion, but domestic demand was still struggling to recover, and fell further. The employment component was stable, but still at a level indicating contraction. Economic indicators published by the Central Bureau of Statistics point to a worrying weakness in industrial exports, which fell by a sharp 9% in July. On the other hand, there were good data about private consumption. The Purchasing Managers Index indicates a change in domestic demand in the coming months.

Published by Globes [online], Israel business news - www.globes-online.com - on August 18, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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