Israel Economic Activity May 2021

Israel: Composite State of the Economy Index growth eases in May

The Bank of Israel’s Composite State of the Economy Index expanded 0.24% in month-on-month seasonally-adjusted terms in May, which followed April’s 0.34% increase. The reading was positively affected by increases in manufacturing imports in May, and higher retail sales 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. As such, May’s figure only partially includes the effect of the conflict with Hamas during the month, and could be revised down ahead as more data becomes available.

On an annual basis, economic activity increased 2.9% in May, which was below April’s 3.5% expansion.

Regarding the outlook, Padmasai Varanasi, economist at Oxford Economics, commented:

“A rapid vaccination campaign has allowed the widespread reopening of the economy and boosted consumer and business sentiment. But while the economy will see an initial boom in activity, a more sustained recovery is contingent on an improved labour market. Israel spent more days in lockdown than any other country in the world (Oxford Coronavirus Government Response Tracker), thereby pushing people into prolonged periods of unemployment that will take some time to reverse.”

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