"Business sector activity expanded in the first quarter of 2012, checking the slowdown trend reflected in the survey in the second half of last year," states the Bank of Israel is its Companies Survey for the First Quarter of 2012.
More than half of the 510 respondents in the survey reported increased activity during the first quarter, with the rest reporting a decline in activity. "The probability of slowdown, which is calculated in the leading index of the survey, is below 50%, which reflects companies' optimism about the future compared with the existing situation. Against all these, most of the net balances are lower in the review quarter than they were during 2010 and the beginning of 2011, and industrial exports have dropped."
The Bank of Israel adds, "Manufacturing output grew in the first quarter of 2012, accompanied by an increase in inventories of finished products. Against this, domestic sales did not increase, exports dropped, and orders for the coming quarter remained unchanged. In commerce an increase in sales was recorded, but, similar to the previous quarter, the increase was not statistically significant. With that, expectations of companies in the sector are for a marked increase in sales in the next quarter."
"Business services companies reported a slight increase in revenue, but sales - in Israel and abroad - are still holding steady. The most salient finding for the industry in the review quarter is companies' optimism about the coming quarter, and particularly with regard to orders from abroad; the hotels industry recorded a slight increase in activity, similar to the net balances during 2011. Activity in the industry reached a peak toward the end of 2010, and the net balances since then reflect stability at a high level.
"Transport and communications companies reported an increase in activity, and orders for the coming quarter show a continuing increase at a similar rate; from the responses of construction companies, there does not appear to have been any change in activity in the industry, while output prices continue to rise. In recent quarters, there has been a significant worsening of demand constraints and some supply constraints, such as a rise in input prices and greater financing difficulties. Against this, the price-of-land constraint has eased. Companies' expectations for the coming quarter are of stability in the industry."
Average inflation expectations for the next 12 months remained at 2.5%. On average, companies expect the shekel-dollar exchange rate in twelve months time to be NIS 3.90/$, similar to expectations in the previous quarter.
The current Companies Survey is the last one that the Bank of Israel will publish, and it will be replaced by the Survey of Business Trends that the Central Bureau of Statistics began publishing in May 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2012
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