Bank of Israel: Corporate Survey
(Communicated by Bank of Israel Spokesman)
Jerusalem, January 17, 2000

The Bank of Israel Research Department today (Monday) 17.1.2000, released its survey of companies for the last quarter of 1999. Based on corporate reports, the survey shows that for the third consecutive quarter, growth is continuing and even strengthening in the economy’s key economic sectors — industry, trade, transportation, communications and hotels. The decline in the construction sector has apparently been halted. The report expects continued growth in all sectors in the first quarter of 2000.

Industrial companies report increase in production for the third consecutive quarter, following declines since mid-1996. The increase in production is accompanied by an increase in local sales and especially exports. It should be emphasized that a large number of companies are reporting an increase in export orders, while local orders remain weak. In the fourth quarter, the number of companies reporting limitations to expansion has not changed, following a significant decline in he previous quarter. The increase in production and exports is in all sub-sectors, except for exports of chemical and plastic and rubber products. High-tech companies reported continuing rise in production, sales, exports and orders as well as rising employment.

Trade companies reported a continuous increase in inventory sales since the beginning of 1999, and expect sales to continue in the coming quarter. The fourth quarter also shows the first reports of an increase in workforce in a long time, in expectance of future sales.

Construction companies report that for the first time since the beginning of 1996, there has been no decline in construction, and even a slight upswing. For the third consecutive quarter, companies report an expected rise in construction projects.

The hotel sector reports an expansion of activity for the third consecutive quarter — reflected by an increase in foreign tourism, after a decline since mid-1996. The rise in reservations is expected to continue in the next quarter. Millennium related tourism has been a factor in this increase.

Transportation and communications companies report a significant rise in activity for the third consecutive quarter. Most of the increase in the fourth quarter has been in air cargo.

Personal business services companies (excluding hotels, banking and trade) report a significant growth in activities and expect further growth in orders in the coming quarter. Because the number of surveyed companies is low (86) no clear conclusions can be drawn from the sector’s figures. This is only the second time that the bank has surveyed the personal business services sector.

The companies’ reports show an expected rate of inflation for the next 12 months at 4.2% (compared to an annual average of 5,.1% in the previous quarter) and 1.1% rise in prices in the first quarter of 2000, compared to 1.7% in the pervious quarter.

The survey covered 690 companies and businesses. They were asked to report trends along certain variables (up, down, no change) and the degree of change (significant, moderate). Only industrial companies were asked to take size of the workforce into account in their answers.