Economic growth continues in Q3

All sectors in the economy continued to grow during the third quarter with the exception of the construction industry, the Bank of Israel said Sunday. According to findings from a qualitative survey of about 600 companies and businesses in various economic sectors, total economic activity continued to expand between July and September as a result of an ongoing increase in both exports and domestic sales. The companies' average provision for inflation for the quarter rose to 2.6 percent compared with 2.4% in the second quarter. About two-thirds of the reviewed companies expected inflation in the next twelve months to fall within the target range. The BOI has a target range for inflation of 2% to 3%. For the fourth quarter of this year, companies participating in the survey forecast a continuation of the positive growth trend in the activity of the business sector at large except for the construction and trade sectors, for which slowdowns are predicted. Following declines until the first quarter of this year, construction companies stabilized in the second and third quarters but were expected to face a modest downturn in the fourth quarter. Sector by sector analysis showed that the output growth rate of transport and communications companies relaxed in the quarter after a sharp rise in activity in the previous quarter, reflecting moderate increases in sales of services to residents and nonresidents. For the second quarter in a row, manufacturing companies saw large increases in output coupled with growth in domestic and export sales. Export orders to date for delivery over the next three months received a boost, whereas domestic orders saw a modest increase. The hotels and tourism industry, which had seen a sharp rise in activity during the first two quarters of 2005, continued its upward trend supported by a rise in overnight stays at hotels by overseas travelers as well as stability in overnight stays by Israelis. For the twelve months to September 2006, the companies surveyed expect the Shekel to move to NIS 4.73 compared with the outlook of NIS 4.68 three months ago. The participating companies forecast a level of NIS 4.61 to the dollar by the end of 2005.