The Melnick state of the Israeli Economy Index fell by a cumulative rate of 11.7 percent in the months of ç 2020. Statistical difficulties, due to a break in the data series, and problems estimating the seasonal factors, do not allow the monthly declines of the index to be separated for the months of April and May. According to our estimate, the industrial production index and the revenue in commerce and services, seasonally adjusted, fell in April by 17.6 percent and 17.3 percent correspondingly (see note below). Imports of inputs for domestic production, which is a major component of the import index, fell in May by 11.3 percent.
According to a conservative estimate, assuming the stabilization of economic activity until the end of 2020, at the level of May, the annual decline in Israel's business sector GDP in 2020 can be estimated at 5.7 percent. The Melnick Index clearly indicates that the Israeli economy is in a deep recession. An annual decline in business sector GDP of 5.7 percent, which represents a decrease of 7.4 percent in per capita terms, has never been observed in Israel since the creation of the State.
Important Note on the Index Data for May: Due to measurement difficulties, the CBS did not publish seasonally adjusted data (for the months of March and April) for the Industrial Production Index and for the revenue in the commerce and services of some sectors. The data we use for the above indicators are calculated on the basis of the original series, without seasonal adjustment, and seasonal factors of the last three years; hence, these data may change when the CBS publishes official data.
Components of the May Index include: a 17.6% decline in the manufacturing output index in April, after a 3.0% decline in March; a decrease of 17.3% in the revenue of the trade and services industries in April, after a decrease of 9.6% in March; a drop of 8.9% in the May index, following a 3.7% rise in April, and a 3.1% decline in the number of employee posts in the business sector in March, after a 0.1% rise in February.