Companies Survey, 4th quarter, 2009


Reports from companies indicate that in the fourth quarter of 2009 business activity expanded significantly, further to the slight rise in the preceding quarter and after the contraction that had begun in the fourth quarter of 2008 in the wake of the global crisis. This recovery, which was reflected in a sharp drop in the probability of a slowdown and a marked increase in the weighted net balance of the business sector, was based on the expansion of both exports and domestic sales. This positive trend in business-sector activity reflects the increase in activity in most of the business sector. There were no indications of expansion in the hotel industry, however. In the labor market, too, there appears to have been a positive upturn in activity; while the number of employed persons has not yet risen, there has been some moderation of the downward trends that characterized this market in previous quarters.

The net balance in manufacturing rose due to the increase in domestic and foreign sales. Companies’ responses regarding orders for the next quarter show that growth will continue to derive from an increase in export orders, but also from domestic sales. In commerce the extent of activity increased, and firms expect an even greater rise in the next quarter. In business services companies reported an increase in the level of activity, following stability in the previous quarter and significant declines since the last quarter of 2008. The increase is reflected in domestic sales of services as well as in sales abroad. On the basis of orders in the industry, these increases in domestic and foreign demand will persist in the coming quarter. The hotel industry reported a moderate reduction in activity compared with the equivalent quarter last year, due to the decline in the number of bednights of both Israelis and foreign tourists. Expectations in this industry continue to be pessimistic. Activity expanded in transport and communications, after increasing moderately in the previous quarter and falling sharply in the quarters before that. Domestic sales of services rose, while foreign sales remained stable, after falling in the preceding quarters. In the construction industry activity rallied, and expectations for the next quarter are optimistic. Average inflation expectations for the next 12 months dipped slightly below the upper limit of the price-stability target, to 3.0 percent from 3.2 percent in the previous survey. Companies expect the NIS/US$ exchange rate in 12 months’ time to be NIS 4 to the dollar, similar to the rate forecast in the previous survey.

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