Central bank's key index falls again, by 0.3% in April

Recession spreads to industrial production, commerce sectors.

shekels good 88 (photo credit: )
shekels good 88
(photo credit: )
The country's leading index of economic indicators declined 0.3 percent in April, its ninth consecutive monthly fall, the Bank of Israel reported Wednesday. "The drop in the index points to a continued decline in economic activity, although at a more moderate pace than in previous months," the central bank said. "The increased severity of the economic situation was led by a fall in industrial production and a drop in imports and exports of goods. On the other hand, the index of trade and services revenue and exports of services rose a little." The decline of the April composite state of the economy index compares with a revised drop of 0.7% in March and 1.3% in February. The Bank of Israel data showed that the fall in the April index was led by a 2.3% plunge in the imports of goods index, following a drop of 1.3% in March. The exports of goods index was down 2.2% in April, after a 3.6% % decline in March. The declines were offset by an increase in the exports of services index, which rose 8.3%, after advancing 3.3% in March. The industrial production index, which lags one month, fell 2% in March. The trade and services revenue index rose 3.9% in March, after falling 0.6% in February. The Central Bureau of Statistics reported Sunday that the economy shrank at a 3.6% annualized pace in the first quarter, after contracting by 0.5% in the fourth quarter of 2008, falling into a recession for the first time in eight years. Exports plummeted and investment in fixed assets slumped. The bureau published data on Wednesday indicating that the recession is spreading throughout the economy. The commerce and services sectors declined 4.6% in annual terms in the first quarter of this year, while industrial production dropped 6.4%. Hardest hit was the wholesale trade sector, which plunged 7.1% in annual terms in the first quarter. Also affected were the restaurant, financial and insurance-services sector, where revenues dropped 6.8% in annual terms, and the food-services and hospitality sector, where revenues fell 6.6%. Against the trend, the health and welfare-services sector saw an increase of 5.8% in revenues during the first quarter. Growth in industrial production dropped 6.4% in annual terms from January to March. The growth rate in industrial production in the mixed-traditional technology sectors (rubber, plastics, metal goods and jewelry) plunged 27.7% in the first quarter. The growth rate declined 18.1% in the mixed hi-tech sector (chemicals and electronic equipment) and 5.7% in the traditional industry sector (food, textiles, clothing and wood). The hi-tech sector rose 5.7% in the first quarter, after falling 3.9% in the fourth quarter of 2008. The bureau reported that the number of full-time positions in the manufacturing sector fell 6.8% in annual terms in the first quarter, compared with a decline of 6% in the fourth quarter of 2008. The largest drop in the number of jobs, 10.9%, was registered in the mixed-traditional technology sector. "The pace of the deterioration is moderating, which, together with a pick-up in confidence indicators, suggests that Israel is likely to be close to the bottom of the cycle," Barclays Capital analysts said in a report Wednesday. Israel's economy is "better than most," they wrote. Israel is likely to be one of the first countries in Europe, Middle East and Africa to emerge from the recession, the report said. Bloomberg contributed to this report.