Economy on the Upswing in August on Strength of Exports

The Bank of Israel's composite state-of-the-economy index rose 1.3% in August for the fourth consecutive month, after suffering declines over the 10 preceding months. The central bank said that the index's positive trend in recent months supports its assessment that economic activity is on an upswing.

The composite index published by the Bank of Israel is an attempt to assess and quantify the dynamics and condition of the economy numerically.

The central bank uses a variety of indicators to study the big picture, including indices like production, the labor market, domestic consumption, and others, adjusted for seasonal effects.

Most of the indices are based on data from the Central Bureau of Statistics, and may be revised after the fact as the CBS updates its data as it is received.

The increase this month mainly reflects an increase in goods and services exports. Nevertheless, manufacturing production and revenues from trade and services declined in July, with minor corrections beginning in June and July.

With regard to the components of the index: The index of manufacturing production rose by 2.8% in July, after increasing by 1.6% percent in June. The trade and services revenue index declined by 3.3% in July, following its increase of 3.7% in June. The index of services exports jumped by 7.1% in August, after plummeting 16.4% in July.

The goods exports index registered an increase of 4.5% in August, following its 2.5% increase in July. The imports index sank by 1.5% percent in August, following a rise of 5.7% in July.

Industrial production still shrinking

Industrial production sank 4.2% in May to July 2009, and high-tech production was down 4.5%, all in annualized terms, according to figures published by the Central Bureau of Statistics yesterday. The number of jobs in industry was down 5% during this period.

Unlike the myriad of positive economic figures pointing to a recovery from the recession, CBS figures indicate that sustainable growth is still a long way off. Although May to July figures are a huge improvement over the previous three months, they remain far from levels prevailing in 2004-2008, a period of global economic prosperity.

Combined high-tech industry declined "just" 8.2% May through July, a vast improvement over the dismal results for the previous three months, which saw the sector plummet 20.2% (annualized). Traditional industry, which shrank by 22.7% from February through April, was down by just 0.8% in the following three months .