Polls show consumers are growing bearish. Photo by Reuters
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Dan Keinan
Supermarket shopping. Photo by Dan Keinan

Three surveys by the government and a private pollster all published yesterday found growing pessimism among business people and consumer regarding the economy.

The Central Bureau of Statistics said yesterday that its consumer confidence index was a negative 22%, the lowest point since last February and March when it stood at a negative 23%. It marked a drop of eight percentage points from the same time in 2011, and four points from the month before.

Meanwhile, a survey of business executives taken by the CBS for July found a decline in business conditions. Its Business Tendency Survey fell to a negative 11.8% for the month, down from minus 9% in June. The index has been negative since May 20111, but the July number was the lowest so far this year, CBS figures showed.

Executives in the hotel and construction sectors said conditions were better in July than in June, but in other industries sentiment was more bearish. This was backed up by the Ziegelman Institute for Marketing Research, which interviews business people for its state of the economy poll. It found that 43% of the 230 managers polled believe that economic conditions will deteriorate in the next six months, up from 30% who expressed that view in the previous poll in May, and 19% in February.

"These developments will make it difficult for the government to fund its expenses," said Ehud Ziegelman, the institute's head of research.

The sour outlook comes as gross domestic product has slowed to a 2.7% annual pace in the first half, from more than 3% in the second half of last year. The slower growth has caused tax revenues to fall, saddling the government with a widening fiscal deficit and forcing it to raise taxes and cut expenses.

The consumer confidence index, which the CBS only began publishing in March 2011, measures personal views of people over age 21 to what changes they expect in the state of the economy, inflation and their personal financial condition. The index ranges between 100% and negative 100%, with indices approaching zero pointing to expectations for no change while those approaching 100% and minus 100% reflect optimism and pessimism, respectively.

In July, all four sub-indices showed declines, with the biggest decline - indicating the highest degree of pessimism - recorded in expectations for unemployment, which stood at a negative 36%, its lowest since February.

Consumers were the most optimistic about the state of their household finances going forward, with the sub-index at a minus-three. Regarding the state of the economy, the index was a minus-22%, a six-point drop from a year ago and a four-point drop from June.

Consumers also expressed more pessimism about the future of their personal savings, with the index falling to a negative 28.

Israelis were not alone in taking a bearish attitude toward the future. Among the countries of the Organization of Economic Cooperation and Development, which all conduct the same survey as Israel, most were more pessimistic in July than a year ago.

The healthier economies of northern Europe had indices of about minus 18.5% in July, versus a positive 1.4% a year ago. In the debt-crisis economies of Greece and Portugal the index was a negative 65 and 50, respectively.