Israel's Industrial Production Growth Slows Again

The figures are particularly concerning since industrial production had been a major source of economic growth in the past.

Shipping containers stand on the quay side near cargo cranes at the Port of Haifa.
Bloomberg

Data published on Tuesday by the Central Bureau of Statistics point to an annualized 8.4% slowdown in Israeli industrial production between August and October.

The figures are particularly concerning since industrial production had been a major source of economic growth in the past. The decline also follows an annualized 4.8% decline in the previous three-month period. 

The main reason for the most recent decline was a slump in the high-tech sector and related industries. High-tech production dropped 9.7% between August and October after shrinking by 5.6% in the previous three months. (All figures are stated on an annualized basis).

There has also been a decline in overall industrial employment, with a drop of 0.4% in the number of salaried positions, including a similar drop in high-tech.

In addition, there has been a worrying 19% decline in the level of industrial exports in the most recent three-month period, primarily – and surprisingly – due to a 25.8% drop in high-tech exports. Exports from traditional industry also dropped, but by a smaller 10.4% margin.

In the period from August through October, output from the economy as a whole declined by an annualized 2.7% after expanding by 1.1% in the prior three months.

When it comes to annual figures on the export of business services, Tuesday’s data show that $26.3 billion in such services were exported in 2015, up from $25.7 billion the year before. The year 2015 also saw the import of $11.4 billion worth of business services.

When it comes to the export of research and development services, 72% last year, $3.5 billion worth, went to the United States.

In 2015, Israel exported $13.9 billion in high-tech services, totaling 53% of all business service exports for the year. The country also imported $3.8 billion worth of high-tech services, constituting 30% of all business service imports.