Key economic index drops 0.5% in May

Many sluggish factories to make workers take vacations this summer.

hi tech 248.88 (photo credit: Ariel Jerozolimski)
hi tech 248.88
(photo credit: Ariel Jerozolimski)
The country's leading index of economic indicators dropped 0.5 percent in May for a 10th consecutive month, the Bank of Israel reported Sunday. "The drop in the index points to a continued decline in economic activity," the central bank said. "The continued economic decline encompassed all sectors, especially trade and services revenue and imports of goods." The decline of the index compares with a revised drop of 0.7% in April and 1% in March. The fall in the May index was led by a 5.2% plunge in the imports of goods component, following a drop of 2.5% in April, and a fall of 3.6% in the export of services index, which rose 4.2% in April. The Central Bureau of Statistics reported Sunday that manufacturing production and revenues in commerce and services industries continued to decline in from February through April, but at a slower rate than in the previous two months. The growth rate in manufacturing production dropped 8.6% in annual terms in February through April, compared with a 16.6% contraction in the November-January period. The slowdown in the decline of industrial production was led by the growth rate of the hi-tech sector, up 1.3% in February-April, after falling 0.5% in the November-January period. Excluding the hi-tech sector, the growth rate in manufacturing production fell 10.3% during the same period. The growth rate in industrial production in the mixed-traditional technology sectors - rubber, plastics, metal goods and jewelry - plunged 23.2% in the February-April period. In the mixed hi-tech sector - chemicals and electronic equipment - the growth rate fell 19.4%. In the traditional industry sector - food, textiles, clothing and wood - it declined 7.1%. The bureau reported that the number of full-time positions in the manufacturing sector fell 7.7% in annual terms in the February-April period, compared with a decline of 7.9% in the November-January period. The mixed-traditional technology sector had the largest drop in the number of jobs, down 11%. The commerce and services industries had a 3.9% decline in annual terms in revenues in the February-April period, slightly recovering from the sharp drop of 11.5% during November-January. The hardest hit sectors were real-estate business and services, down 7.8%; food and hospitality services down 5%; and education services, down 3.5%. Health and welfare services was up 5.8%. Slowing growth and a sharp decline in demand since the outbreak of the global economic is forcing 19% of manufacturing factories to discontinue operations for part of the summer as employees will be sent on vacation days, the Israel Manufacturers Association reported Sunday. In a survey of more than 80 factories from all sectors of the economy, the association found that about one-third of textile manufacturers will have their employees take vacations, as will 26% of metal and electrical, 23% of food and 20% of hi-tech. About 15% of manufacturing factories will have their employees take vacations while maintaining production. At 68% of the facilities, vacation days will be taken at the worker's discretion, while 8% the days chosen will be based on product demand and planned deliveries. The association said the figures add up to over 100% since some factories will send employees on vacation according to more than one scheme. The survey also showed that 25% of the factories subsidize summer camps for employees' children, 23% finance part of a vacation or a weekend for employees, 27% organize activity days for employees, while 43% don't arrange any summer activities for their employees.