traders watching stocks.
(photo credit: Rafael Marchante/Reuters)
Israel’s growth rate will slow in the fourth quarter of 2011, for the first time
since the second quarter of 2009, the Bank of Israel reported Sunday in its
Survey of Companies for the Third Quarter.
The slowdown in growth will
follow the slower growth in May-August 2011 as economic uncertainty
The slower growth in the fourth quarter will be due to
domestic consumption, manufacturing exports and sales of services abroad, the
same factors that affected Israel’s growth in the third quarter.
Survey of Companies found that industrial output rose slightly in the third
quarter, compared with the preceding quarter, due to a standstill in export
sales, especially by hi-tech companies. The slowing in the net balance of output
compared with the second quarter was most pronounced among smaller firms, though
expectations for the following quarter are for a slowdown in output for both
large and small companies.
The growth in commercial activity slowed in
the third quarter, and the number of employees in the sector was unchanged.
Companies expect a further increase in sales in the fourth
Business services companies also reported slower growth in the
third quarter than in the preceding quarter, due to lower domestic and foreign
sales, and they expect the decline to continue in the fourth
Israel’s slowing growth is taking place against the background
of debt crises in Europe and volatility in the financial markets, the fear of a
major slowdown in global growth and continuing geopolitical instability in the
The Bank of Israel notes that, for the first time since the
second quarter of 2009, the The Israel Purchasing Managers Index fell below the
50 percent dividing line between economic expansion and contraction, reflecting
the strong probability of another slowdown in activity.
The Bank of
Israel notes that 12-month inflation expectations fell to 2.6% in the third
quarter from 3.1% in the second quarter. Companies expect that the shekel-dollar
exchange rate twelve months from now will be NIS 3.80/$, compared with NIS
3.60/$ forecast in the previous survey, and NIS 3.70/$ during the period that
the survey was conducted.