Israel Economic Activity May 2020

Israel: Composite State of the Economy Index contracts at sharpest pace on record in May

The Bank of Israel’s (BoI) Composite State of the Economy Index declined 1.80% month-on-month in seasonally-adjusted terms in May (April: -1.56% mom). May’s reading marked the sharpest contraction on record. The fall was driven by lower imports in May and weaker industrial production, and retail and services revenue in April. The index is calculated using the latest available data and hence uses a combination of figures from recent months to provide a comprehensive picture of the economy’s performance.

On an annual basis, economic activity fell 1.9% in May (April: +0.1% yoy), the worst result since May 2002. Recent figures could be subject to substantial revisions, as BoI pointed out, due to some subcomponents being published with a lag.

Looking ahead, economic activity should recover somewhat moving into H2, although the recent surge in Covid-19 infections and snap back of some social distancing measures could limit the rebound.

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