The Melnick State of the Economy Index Unchanged in November

The effect of the second lockdown is more moderate than that of the first lockdown

Demand is the main factor in the decline in economic activity

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The Melnick State of the Israeli Economy Index did not change in November 2020. From the November and October indices data, we learn that the impact of the second lockdown on economic activity was more moderate than that of the first closure. The Industrial production index, which reflects the supply side of the business sector, decreased in October 2020, the second lockdown month, by 0.7%, compared to a decrease of 9.4% in March 2020, the first month of the first lockdown. The revenue in commerce and services, which reflects domestic demand and especially private consumption, decreased in October 2020, by 0.5% compared to a decrease of 13.4% in March 2020. The level of the industrial production index in October 2020 is like that of October 2019, however the revenue in commerce and services was lower in October 2020 by 6.1%, compared to the level in October 2019. The data indicate that the supply side of the business sector is less affected, and demand is the main cause of the recession in the economy.

 The components of the November Index include: a decrease of 0.7% in the industrial production index in October, after an increase of 2.6% in September; a decrease of 0.5% in revenue from commerce and services in October after a decrease of 2.8% in September; an increase of 4.0% in the import index in November, after a decrease of 1.5% in October and a 1.0% increase in the number of employee posts in the business sector in September, after an increase of 0.5% in August.

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The Melnick State of the Economy Index Unchanged in October

  

The economic recovery ceased due to the imposition of the second lockdown

The economic impact of the second lockdown will be reflected in the indices of November and December

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 The Melnick State of the Israeli Economy Index did not change in October 2020. The freeze in the Index reflects only partially the halt in economic activity due to the second lockdown, announced at the end of September, following the recovery of activity that took place during the summer months. A more complete picture of the lockdown effect on economic activity will be obtained in the indices of November and December.

An update of the components of the Index gives a better picture of the economic activity recovery, which occurred in the business sector, after the easing of the first lockdown. As stated, the recovery was halted due to the imposition of the second lockdown.

 The components of the October Index include: a 4.0% increase in the industrial production index in September, after a 2.0% increase in August; a 0.7% decrease in revenue from commerce and services in September after a 1.1% increase in August; a 1.2% drop in the import index in October, after a 5.4% increase in September and a 0.4% increase in the number of employee posts in the business sector in August, following no change in July.

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The Melnick State of the Economy Index Rose by 0.5 Percent in September

The second lockdown will lead to a sharp decline in economic activity

It may be estimated that the decline in business output in 2020 will be 8.5% 

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The Melnick State of the Israeli Economy Index rose by 0.5 percent in September 2020. The rise in the Index reflects a slight recovery in the activity of the business sector in the summer months before the lockdown was announced at the end of September. Despite the recovery, the level of activity remained at a very low level. It turns out that the release of the lockdown alone is not enough to rehabilitate economic activity, if there is no solution to the presence of the pandemic. The second lockdown will lead to a sharp decline in economic activity. The initial effect of the second lockdown will be partially reflected in the October Index and the fuller effects in the November and December.

 Assuming the decline in the indices, by the end of the year, will be similar to that which occurred during the first lockdown, it may be estimated that the decline in business output, in 2020, will be 8.5%.

 The components of the September Index include: a 0.6% increase in the industrial production index in August, after a decrease of 3.3% in July; a 0.7% increase in revenue from commerce and services in August after a 1.4% increase in July; an increase of 5.4% in the import index in September, after an increase of 1.3% in August and an increase of 0.1% in the number of employee posts in the business sector in July, after an increase of 11.7% in June.

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